Ireland's Post-Crisis Economy: Challenges and Progress
Six years after the crisis, Ireland's economy is showing signs of recovery but still faces challenges. GDP growth is faster than the U.S., but unemployment remains high. Investment is growing, but consumers are cautious. Wages are low, inflation is in check, and housing prices fluctuate. Ireland's exports are led by pharmaceuticals, not Guinness. Austerity measures are easing, but the national debt is a concern. Despite improvements, Ireland's economy is still fragile, with unemployment forecasted to remain high.
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Ireland Six Years After Crisis, Emerald Isle Is Wearing the Green But Not Rolling In It
Irelands Better Not Great Growing Faster than U.S. GDP Rose 4.8% in 2014 v. 2.4% in U.S. Unemployment is Still 10.1% -- U.S. is 5.5% Both Economies Hiccupped in 4thQuarter Sources: CIA Factbook, Eurostat, Bureau of Labor Statistics, Irish Central Statistics Office.
Irelands Recovery Is Different than in the U.S. Investment is Growing Faster There +11.3% in 2014 Ireland +5.9% in the U.S. But Irish Consumers Aren t Spending Much In late 2014, U.S. consumption rose 4%/year In Ireland, consumption grew just 1.3% Data: Irish Central Statistics Office, U.S. Bureau of Economic Analysis
Beer, Housing, Wages All Depressed As in U.S., Wage Growth is Slow but Low Inflation Helps Inflation. -0.1% in U.S., -0.6% Ireland (Year Ending Jan. 2015) Wages: 1.7% U.S., 1.7% Ireland (Year Ending December) Home Prices Fell By Half, Versus About One-Third in the U.S. And rose 8% last year What is there to life? Irish Beer prices still down 10% from 2009 But Beer s Up 9.6% Since 2012 Sources: Federal Reserve, Bureau of Labor Statistics, CSO
Irelands Biggest Exports Not What You think Exports, Like Investment, Lead Ireland s Recovery It s Not Guinness Which is Made All Over the World About a third of exports are pharmaceuticals or other medical goods. About 14% is food and drink Google, Microsoft and Johnson & Johnson are top exporters from Ireland Sources: Irish Exporters Assoc., MIT, Eurostat, CSO, WSJ
Easing Off Austerity Ireland is Big Gainer from European Central Bank easing, which helps exports Irish 10-year bond yield 0.82% No new spending cuts needed to meet deficit targets, local experts say Irish Budget Deficit is Smaller but National Debt is Much Larger than in U.S U.S. Debt = 72.5% of GDP Ireland Debt= 118% of GDP Ireland could be vulnerable if Greece falters and creditors get wary Sources: Economic and Social Research Institute (Dublin), Moody s Analytics, IHS Global Insight, Investing.com
Bottom Line: Better, but Could Still Use a Drink Unemployment Forecast to Stay Near 10% Through 2016. 10.5% 2015, 9.9% 2016 Growth expected to be faster than U.S. for next two years 2015: 3.3% Ireland, 3.1%US 2016: 3.2% Ireland, 3.0% US Quote: Things are looking up, but in the near term the growth rate is misleading. The weakness of the euro should really help. Diego Iscaro, IHS Global Insight Data:, Origanisation for EConomic Cooperation and Development
