Ireland in recession for first time since 1983

[orieleye]

THE ECONOMY will experience a recession this year for the first time since 1983, and a return to net emigration next year, the Economic and Social Research Institute (ESRI) forecasts in its latest Quarterly Economic Commentary, published today.

It anticipates that the economy will contract in size by 0.4 per cent this year after growing by 4.5 per cent in 2007.

This recession reflects a steep decline in domestic demand, according to the ESRI, which calculates that the volume of domestic spending this year will fall by 2.6 per cent. Investment spending is forecast to fall by 14.9 per cent while real consumer spending growth in 2008 has been revised downwards by the ESRI to just 1 per cent from 3 per cent just three months ago.

Shares in Irish companies fell heavily as news of the report leaked into the market. Bank shares were particularly badly hit, with Bank of Ireland down 5 per cent.

The ESRI expects economic growth to resume next year, with a forecast expansion rate of 1.9 per cent.

However, this will be insufficient to stem a recurrence of net emigration in 2009. The ESRI projects that the outflow of people from the country will reach 20,000 next year, a level of net emigration not seen since 1990.

The reappearance of net emigration signals a steep deterioration in domestic labour market conditions. The ESRI projects that the level of unemployment will increase by 60,000 or 60 per cent between 2007 and 2009.

The unemployment rate - the number out of work as a percentage of the labour force - is expected to climb from 4.5 per cent in 2007 to 6 per cent this year before increasing again to 7.1 per cent in 2009. The numbers at work in the economy next year are forecast to be smaller than in 2007.

Yesterday, the financial services group Hibernian announced plans to move more than 500 jobs to Bangalore in India in the next three years.

The recession will also derail the public finances. From an overall budget surplus of €5.2 billion in 2006, the Government is expected to incur a deficit of €7.4 billion in 2009, a turnaround of more than €12.5 billion in the space of three years.

Source

They're being coy about who the emigrants will be; departing foreigners don't really fit the bill. Other European countries with more experience of immigration (eg. Holland) discovered that economic downturns don't necessarily make economic migrants leave. I can't imagine the most undesirable immigrants (Africans) chasing jobs abroad. They would leave the integration special interests high and dry if they did.

[Menydh]

The recession in the Irish economy is closely linked to the burst of the bubble of the construction market which, as in the case of Spain, it has seen an artificially and extremely high boom in the last years due to the growth in immigrant population. This has also lead to an artificial increase in house prices and, consequently, a high rise in inflation. The crisis is served and it can reach the levels of a depresion.