Research and Markets: OECD Economic Surveys: Ireland 2011

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DUBLIN--(BUSINESS WIRE)-- Research and Markets (http://www.researchandmarkets.com/research/6ee587/oecd_economic_surv) has announced the addition of OECD Publishing's new report "OECD Economic Surveys: Ireland 2011" to their offering.

The Irish economy was hit by a severe crisis in 2008, after over a decade of strong growth that propelled Ireland to the fourth highest level of GDP per capita in the OECD. Initially growth was well founded on solid productivity increases. However, during a period of low-cost funding on international markets and low risk aversion globally, the expansion became increasingly reliant on a speculative housing bubble financed by lax bank lending standards and excessive credit expansion that collapsed in 2008 in the midst of the global economic and financial crisis.

During the latter part of the boom, the acceleration of wages eroded international cost-competitiveness and the banking system became over-extended and, once the bubble burst, would have been insolvent without state support. Capital injections to help resolve the crisis have resulted in a sharply higher public debt. In the aftermath, households have been hit by wage cuts, job losses, tax increases and falling house prices, though living standards and perceptions of well-being remain high by international standards. Since 2008, the government has carried out a very sizeable fiscal consolidation. This effort is continuing. The three-year adjustment programme with financial support from the IMF and EU is on track and has started to tackle the roots of the imbalances. Following comprehensive stress tests, the banking system has been recapitalized, but the banks still require liquidity support from the Eurosystem.

This Survey argues that the authorities should:

Persevere on the path of fiscal consolidation
Continue to fully comply with the conditions and targets of the EU-IMF programme;
Reduce the budget deficit to below 3% of GDP by 2015;
Reduce the budget deficit faster than required by the programme to help regain credibility in financial markets if economic growth allows

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