Has 'Celtic Tiger' lost its roar?
After a 6-percent growth spurt last year, Ireland's "Celtic Tiger" economy may have hit its peak and could now falter, economists are warning.
They argue that for the good times to last, the economy will have to become more competitive and productive, exports will have to grow and a long-running property boom that has spawned thousands of bricks-and-mortar millionaires will have to be wound down in an orderly manner.
Last year's growth was the highest for seven years. Ireland's leading economic think-tank, the Economic and Social Research Institute (ESRI), has forecast that expansion in the country's gross domestic product will now fall to 5.4 percent this year and 3.9 percent in 2008.
Finance Minister Brian Cowen, whose Fianna Fail-Progressive Democrat coalition government faces an election before June, is not far behind with a prediction of 5.3 percent.
Weakened dollar
Alan Ahearne, who is an economics lecturer at University College Galway, is concerned that the dollar will weaken further against the euro and in Ireland, with its open economy and reliance on US industrial investment, it will make Irish exports more expensive and less competitive.
In examining the sustainability of the current boom, the ESRI shows how increases in Ireland's consumer price index (CPI) that measures inflation tend to feed rapidly into wage increases.
"A repeat of this phenomenon in the current context of high growth in the CPI would be particularly damaging to competitiveness," it warns.
AFP
(China Daily 04/03/2007 page16)
