The Organisation of Economic Co-ordination and Development (OECD) has praised the Irish Republic’s “very sizeable” efforts to downsize the country’s budget deficit. As a result, the Irish economy is showing a “modest recovery,” said the OECD.
They also warned that the upswing may not last, as it is still susceptible to the financial hazard wrought by the eurozone debt crisis.
Keep it up
The group urged Ireland to continue in its move to cut public spending. This is necessary, as the country continues to receive bailout instalments from the European Union and International Monetary Fund.
It also received 85 billion euros (£72bn) in bailout last year, with £3.2 billion of the money coming from the UK.
The Irish Republic is one of three eurozone countries that have received funds from the EU-IMF bailout, including Portual and Greece.
Experts are concerned that the financial crisis that overtook Ireland, Portugal, and Greece could spread to other debt-laden countries such as Spain and Italy. The wider European economy is in jeopardy because of Euopean bank exposure to debts from these countries.
The OECD also predicts that the Irish economy will expand 1.2% this year, after its 0.4% contraction in 2010.
It also forecasts that Ireland will be able to reduce its 11.9% GDP budget deficit to 10% this year. Following that, it predicts a fall to 8.6% in 2012 and finally to 2.8% in 2015.
However, it warned the Irish Republic that something must be done about its unemployment rates. In September, Irish unemployment hit 14.3%.
The Irish economy experienced a boom throughout the decade, until the global financial crisis in 2008, when the country was ill-equipped to deal with the financial squeeze.
The crisis brought an end to the cheap credit which was sustaining the country’s growth and causing a bubble in its housing market.