Economy of Ireland

Topics: Economy of the Republic of Ireland, Celtic Tiger, Irish property bubble Pages: 12 (4036 words) Published: November 14, 2010
Economy of Ireland

I. Introduction
The economy of Ireland has transformed in recent years from an agricultural focus to a modern knowledge economy, focusing on services and high-tech industries and dependent on trade, industry and investment. Since the mid 1990's, Ireland has experienced consistent growth rates of up to 10% per annum. This has been attributed to years of strong government planning through the implementation of five-year National Development Plans. These plans provided for large-scale investment in infrastructural projects and the focused development of Ireland as a base for multinational export-oriented companies. Ireland was transformed from one of the poorest countries in Western Europe to one of the wealthiest. Disposable income soared to record levels, enabling a huge rise in consumer spending. A study by The Economist found Ireland to have the best quality of life in the world. The 1995 to 2000 period of high economic growth led many to call the country the “Celtic Tiger”. By mid-2007 in the wake of the growing global financial crisis the Tiger had all but died. In early January 2009, the Irish Times in an editorial declared that: We have gone from the Celtic Tiger to an era of financial fear with the suddenness of a Titanic-style shipwreck, thrown from comfort, even luxury, into a cold sea of uncertainty. Ireland was the first EU economy to enter recession in 2008. The reasons for the Irish recession are similar to the UK. The Irish economy is closely tied to the US economy. The US gave over 33% of inward investment into Irish manfacturing. The recession in US is likely to caused a knock on effect in Ireland. There is many other reasons like collapse in the housing boom, decline in construction, banking sector in turmoil, falling consumer spending and decline global demand. Former Taoiseach Garret FitzGerald has blamed Ireland's dire economic state in 2009 on a series of "calamitous" government policy errors. The global economic crisis has left deep scars that will take to heal, but the Government must start now to plan for economic growth. Viable and sustainable enterprises and employment are lost. Different economists have several ideas how to response to the recession and what has to be done to get out of it. Irish government need to boost spending on training and job-search at this critical time. But they also need to provide the right incentives to the unemployed. These are key priority areas. However there is no simple answer. There is few recommendations that can help to take effective action to help our economy recover their lost potential. .

II. The Celtic Tiger

The Celtic Tiger is dead and gone, or is it just after suffering a massive coronary, that can be repaired with stents and multiple bypasses? To understand how the tiger managed to get himself into such a state of bad health we need to look back at how nearly two decades of partying inevitably lead him to the emergency room. A deadly cocktail of greed, reckless public expenditure, reckless lending and investments by financial institutions, corruption, a rip off culture and a bartender, the financial regulator, turning a blind eye, was more than this tiger could take in the end; it was time to call the paramedics. On arrival at the ER it became apparent that the bubble that this tiger had been living in had obviously burst and the result of this was housing collapse, decline in construction, which had become the backbone of the economy accounting for almost 25% of GDP, falling consumer spending, government and banking debts in the billions of euro and unemployment on a massive scale.

III. The Construction Sector

It is apparent to even the dog on the street that the construction sector was probably one of the hardest areas hit when the bubble burst. It went form a height of 269,000 employed in 2007 to 155,000 by the middle of 2009 according to the Central Statistics Office (CSO). After 2000 the entire economy in Ireland...
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