Ireland

Ireland: life after crisis

Ireland has been recovering after a major economic and banking crisis in 2009-2010. The EPI grades Ireland’s current economic performance at a B level, with the EPI score projected to be 92.6% in 2015.

A combination of GDP drop, increased unemployment, and high bank recanalization cost that the government had to pay translated into the EPI score of 52%, or an F level, in 2010. A prolonged period of fiscal austerity since 2009 helped to reduce the fiscal deficit from a peak of 32.3% of GDP in 2010 to 1.3% in 2016. GDP growth is projected to be close to 3.8% in 2016, as conditions stabilize domestically and in the euro zone. Inflation is still small and in line with the Eurozone average, but the unemployment level of 8.5% remains high.

The 5-Minute Economist projects Ireland’s EPI score to remain roughly at the same level in the medium term, showing solid B level economic performance. Economic growth is likely to decelerate after the initial effects of recovery fade out. Inflation is projected to start picking up from the currently low levels. The government is projected to run close to a balanced budget and the unemployment level is likely to drop below 7% in the medium term.