Ireland has fastest growing peripheral economy 2010-2016 but will only reach 2007 level in 2016

Posted on Tuesday, 12 April 2011

The International Monetary Fund (IMF) World Economic Report published Monday, April 11, 2011, shows Ireland as having the fastest-growing economy, as measured in nominal GDP terms, among the European periphery countries (Greece, Portugal, Spain and Ireland) between 2010 and 2016.  However, because of Ireland's decline in the 2007-2010 period, Ireland will simply reach its 2007 level in 2016.

The other four countries will have grown by between 15% and 22% over the same decade.  While the approach of using nominal GDP may be questionable this comparison does give some idea of the huge adjustments Ireland has made and is still facing to get back to 2007 nominal GDP levels.

A day later in its Fiscal Monitor, the IMF forecast that Ireland will not achieve its deficit target for 2011 which it believes will be 10.8% in contrast to the Government's forecast on Budget Day of 10%.  It also claims that Ireland will not reach its 3% target level in 2015 as forecast by the new Government in its Programme for Government. The IMF doesn't believe that Ireland will reach that target by 2016 either when it forecasts Ireland's deficit will be 3.8% of GDP.

All of which raises serious questions about the IMF/ECB/EU bailout terms.  Social Justice Ireland's initial response to the bailout agreement claimed that the scale and pace of the adjustment being sought was such that it would seriously damage the economy.  We also claimed that the adjustments contained in the Bailout failed to provide for the employment growth and support that is essential if Ireland is to emerge from this series of crises.  We stand by that analysis.

The terms of the bailout are unjust and unfair, they hit the vulnerable and the poor at an unacceptable level and they have produce a situation in which the most vulnerable and poorest are being dispossesed and their resources (financial and services) are being appropriated to pay those who took risks, gambled their resources, lost and are now to be fully re-paid.  As we stated on the day the bailout was announced: "This process may be legal but it is profoundly immoral. It is a process which is securing and protecting the position and resources of those who are rich while taking away even the little they have from those who are poor, vulnerable and on the margin. It should not be allowed to continue."

The major conclusions of the IMF World Economic Report are:

  • Global growth forecast at around 4 1/2 percent for both 2011 and 2012
  • High unemployment and commodities prices pose major social concerns
  • More progress urgently required on fiscal and financial repair and reform
  • Work needed to rebalance global demand, address imbalances

The report concludes that global economic recovery is gaining strength, with world growth projected at about 4½ percent in both 2011 and 2012, but unemployment remains high, and risks of overheating are building in emerging market economies.

The Document can be accessed here