trueeconomics.blogspot.com / By Dr. Constantin Gurdgiev / Tuesday, January 8, 2013
Here’s a summary of my points from tonight’s RTE Frontline discussion. Note: these are not exaclty written up as an article, so treat them as working notes.
As a preamble, let’s recognise three things:
- The current Government did inherit the economy effectively dead on the ground – at the bottom of a massive cliff. Since then, the economy remained largely static and structurally virtually identical to the one in 2010.
- The current Government did inherit a policies straight-jacket, breaking out of which would have required a massive amount of courage and leadership.
- The current stabilization can lead to an uplift in growth, to 1%-1.5% pa on GDP and under 1% pa on GNP side, but I would not call such a development ‘green shoots’.
In my view, two rhetorical or allegorical analogies can be made for the Irish economy today:
One: the economy is a glass-half-full for the few (MNCs & some exporters) and empty for the many (ordinary households and SMEs).
Another: the green shoots we might be seeing in months to come are more likely the shoots from the last years’ crops seeds that have failed to germinate in 2010-2011. The field of the Irish economy has not been properly seeded in years now.
Four core problems faced by Ireland going into 2013 are largely the same ones as we faced in 2008-2012 and the same ones the Coalition Government had highlighted in years of opposition:
- Fiscal deficit and debt
- Households debt
- Growth and structural reforms