The (not so bad) troubles

25 June 2008 By Ian Campbell

The Irish economy may contract this year. House prices are falling and government finances are in difficulty. That s tough, but will only erase a sliver of a generation s enormous improvement. Ireland s new challenge is to compete with other rich countries as a peer.

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Ireland's economy will contract by 0.4% in 2008, the first recession since 1983, according to the Economic and Social Research Institute (ESRI) in Dublin. ESRI expects the central government budget deficit to rise to 2.8% of GDP in 2008 and 3.9% of GDP in 2009.

The average Irish house price fell by 1.1% in April and by 9.2% year on year, according to the ESRI House Price Index.

The Irish consumer price inflation rate was 4.7% in May, a percentage point above the average for the eurozone.

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