It was just a year ago that Ireland was in recession and losing a job each and every five minutes. Yet according to the Wall Street Journal, a 2.7 percent bump in GDP as it relates to Ireland’s export market is an official sign of the end of recession. That does not gel with the long economic recovery most experts predict for Ireland. Entering 2010, Ireland had lost 14 percent off their GDP over two years, making them one of the hardest-hit euro zone countries. Prime Minister Brian Cowen is urging Ireland to be prepared for hard times for the next 10 to 15 years.
Ireland’s recession – Investor medicine needed
Ireland and its recession have continued largely as the country is paying much more on its benchmark bonds than more economically healthy euro zone countries, says the Times. Investors are downcast and guaranteed loan borrowing continues to fly, both of which has made things tough for the Dublin brain trust. Ireland’s primary goal is to restore investor confidence through deficit reduction, but higher taxes, lower salaries for public workers and the fallout of the burst housing bubble – including an uptick in the origination of low cost loans – have made it difficult for Ireland’s population to wait patiently.
What can exports do for Ireland?
Ireland has previously depended upon the business of info companies like Intel and Microsoft, but this time, they’re hoping exports will fuel their economic recovery. Wage and energy cost decreases – also as a falling euro – have “improved competitiveness,” writes the Times, but that might not create enough jobs. In fact, wage cuts have driven young workers away. They want instant loans, not the promise of a better Ireland in 10 to 15 years, when experts predict future infrastructure spending will resume.
Cowen worried about 2012
The long, hard road to economic recovery via tough deficit reduction may be the only way that Ireland will escape recession. But it will likely not happen fast enough for Irish voters in the next election. Prime Minister Cowen hopes his promise not to cut public salaries any more will be enough to save him, but it appears doubtful. Irish voters might not be able to wait any longer.
More information available at these websites:
http://online.wsj.com/article/SB10001424052748703426004575338433422665358.html?mod=googlenews_wsj
http://www.nytimes.com/2010/06/29/business/global/29austerity.html?hp=&pagewanted=all
