Ireland or popularly known as the Republic of Ireland is a country located in the north western part of the European continent, occupying a landmass of 70,282 square km. Ireland gained independence from the UK in a failed Easter Monday Rebellion that started in 1916 and ended in 1921. According to professor Nolan, Ireland is locked in the turbulent waters of the Atlantic Ocean that washes its northern, southern and western shores. The country’s geography is better shaped and defined by its eastern side that borders the UK along the Irish Sea.
The CIA classifies Ireland as a small but modern trade-dependent economy that was among the first countries, which started the circulation of the euro in the early 2002. The CSO reports that 2008 financial crisis did not spare Ireland but caused a major economical and political crisis in the country. The federal government of Ireland officially announced in September 2008 that the country had fallen into depression (CSO). The country’s GDP has been about 6% for a decade until 2007, when it dropped due to the onset of the financial crisis. GDP has been falling sharply from 8% in 2009, 3% in 2008 to a low of 1% in 2010. The CIA further reports that the country officially entered into recession in 2008 for the first time ever in more than 10 years. This meant that its domestic property and construction markets collapsed. Before the recession in 2008, property prices in Ireland rose more rapid than any other country, but since then they have fallen to 47%. Due to the collapse of the construction sector, low consumer spending power, as well as low business investments, a key component of the country’s export sector has been multinational companies that are dominated by foreigners (CIA).
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The country’s agricultural sector has been dwarfed by industrial and services sector, despite its being once the most important sector in the country. In the wake of the 2008 financial crisis, the COWEN government budged to assure its people that their bank deposits, the banking system, and the venture capitals were safe. However, the crisis continued in 2009 and the government continued in its efforts to stabilize the banking sector by establishing the National Asset Management Agency that was mandated to acquire development loans and the problems of commercial property. With the reduced revenues and a stark reality of a budget deficit, the country introduced some draconian budget in 2009 and the following years. These included wage reductions for public employees, across-the-board cuts. However, the above measures were not enough (CIA). According to Lewis (2011), it was estimated that the crisis had led to Irish banks losing an estimated 100 billion Euros. Much of these losses stemmed from defaulted loans to homeowners and property developers resulting to an economy collapse in 2008. The collapsed economy saw unemployment rise to 14% in 2010 from a low of 4% in 2006, while the country’s budget went from a surplus seen in 2007 to the 2010 deficit of 32.4%. Instead of guaranteeing bank deposits and letting private bondholders face losses, Ireland borrowed money from the EU and IMF. This meant that the country shifted its losses and debts to taxpayers. This had a severe impact (negative impact) on the country’s creditworthiness (Lewis, 2011). We have seen earlier that by the year 2010, the country’s budget deficit had reached 32.4% of its GDP. This was in fact the world’s largest deficit in accordance to a country’s GDP. Later in the year, the COWEN government agreed for a loan package from the IMF and EU totaling $112 billion to help it capitalize its banking sector as well as avoid defaulting on its debt. A new government, the KENNY government was voted into office in March elections. The new government has increased measures aimed at meeting the country’s deficit target as set out in the EU-IMF program (CIA). According to a report, published in May by the IRISHTIMES, the Organization for Economic Co-operation and Development (OECD) predicted that the Irish economy was near a “turning point” in spite of warnings that the recovery was expected to be weak. OECD, however, warned that although the “turning point” is expected to stem from the government’s rescue plan, it was not very clear the full impact it could cause.
The country achieved moderate growth in 2011 and successfully cut budget deficit by 10.1% of its GDP. Experts however warn that the recovery will slow in 2012 due to the raging euro-zone debt crisis that has affected countries using the Euro (CIA). The news that the country slipped again into another recession have hit mainstream media, including Wall-Street‘s Linda Young. In a report published on March 22, 2012, Young reports that the country fall into recession in the last quarter of 2011. Data from the CSO indicates that the country contracted by 0.2% from October to December, 2011. However, it indicated that consumer spending had increased by 0.5% in the same period, the country’s export fell 1.1%. This means that the growth rates for the second quarter in 2012 were revised from 1.4% to 1.1%. The recession news comes as the government has tried to persuade lenders, who bailed it during the previous recession, that it will be given a break of $40.97B on promissory notes. However, it seems that this request has failed (Linda, 2012). The news comes in the wake of previous reports, indicating that the country may be getting out of recession; therefore, it means that the government and other stakeholders need to urgently tackle this crisis to avoid the country sliding into another recession.