No Luck: Irish Economy Tanks

Shaaz Nasir

Irish economy contracted by 1.2%

The Irish are in serious trouble, they in fact could trigger mass confusion and economic chaos across Europe. No this anarchy is not based on logic but rather fear. No economic policy can truly take on fear by itself.

This is the last thing Europe needed (as reports about the success of India and China despite the recession are found everywhere)….Ireland may be heading into another recession.

“The Irish Republic’s economy shrank in the second quarter from the previous three months, surprising analysts who had been expecting growth. Gross domestic product (GDP) fell 1.2%, the Central Statistics Office said.”

Germans vs The Irish

“The difference between yields on 10-year Irish government bonds and German bonds -considered the safest – rose to its highest level in more than 10 years. Irish debt is trading 4.25 percentage points above equivalent German bonds. This spread reflects how much riskier markets perceive the Irish economy to be compared to Germany’s.”

“The Central Statistics Office said the economy had been hit by a fall in consumer spending – down 1.7% compared with the same period last year.But exports showed strong growth, up 884m euros (£751m) on a year ago.”


“We must export our way out of our current difficulties, there is simply no other way”

-Brian Lenihan, Irish Finance Minister

Exports$108.6 billion (2009 est.)
Export goodsmachinery and equipment, computers, chemicals, pharmaceuticals; live animals, animal products
Main export partnersUS 20.52%, Belgium 17.78%, UK 16.31%, Germany 5.66%, France 5.56%, Spain 4.19% (2009)

“The figures for exports are strong and I am encouraged by this – the necessary competitiveness improvements are working, Finance Minister Brian Lenihan said in a statement”

Finance Minister is Wrong

Looking at the chart it is clear that the US ….Belgium…and the UK are the main export partners which means the Irish are plopping all hope on those countries for growth…

Not only are your export partners in trouble but also the actual products you are selling are junk relative to your competition.

Machinery, Computers, Chemicals, Animal products…really?

Ireland has little hope in the manufacturing industry thanks to the powerhouse called China, the Indians are taking command in the chemical industry, the economic reality is simple: Ireland needs structural changes to the economy. Not more of the same….the Finance Minister needs to rely less on the Irish luck and more on structural changes in the competitive advantages of the country. The Irish are strong people with a rich history and unique culture, they can do better.

Productivity growth is the most important factor in Ireland’s future growth, according to Forfas the national policy advisory board for enterprise, trade, science, technology and innovation. “Irish employment rates are now above the EU average, while wage costs increased by 35 per cent between 1999 and 2004”. Given these trends, Ireland’s ability to catch up with the living standards of the world’s richest regions now depends on increasing the productivity levels of those already in work. Many of the countries with the highest productivity levels in the world are also the ones with the shortest average working hours per person. Strong productivity growth makes rising pay levels consistent with strong industry profitability and better public services.

There is a Irish saying “There’s no need to fear the wind if your haystacks are tied down”

Ireland, your haystacks are not tied down.

*the data was from wikipeida, the “blocs” from a BBC article and the International Journal of Productivity and Performance Management