Ireland’s economic problems have been largely forgotten as concerns about a financial collapse of Italy and Spain have taken the spotlight. That likely will change now. Research firm Davy has significantly cut its 2012 GDP forecast for Ireland to 0.4% from a previous number of 1.7%. Ireland’s national economy has worsened as much as those of the most troubled eurozone economies. It is a reminder that the sovereign debt problem goes well beyond each day’s headlines.
Late last year, Ireland received $113 billion in bailout funds from the EU and International Monetary Fund. The set of loans is relatively small compared to the money that Italy and Spain may need. However, it is another straw on the weakening back of newly planned European bailout facilities. These “imminent” rescue programs have already hit political resistance in France and Germany. More beggars at the table could cause a tipping point that would further damage plans for a systemic set of solutions.
Ireland is easily forgotten as the size of the region’s financial problems grow. But its GDP is as large as Portugal’s, and nearly three-quarters the size of Greece’s. So its negative contributions will rattle anxious finance ministers as they try to craft a set of solutions to calm the global capital markets.
Ireland is back near the center of the sovereign debt crisis, and it only took a few short months for its return.
Douglas A. McIntyre
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