It's the economy, stupid

Doomsayers are having a field day following finance minister Brian 'Juicy Lips' Cowen’s warning yesterday that the Irish economy has reached a “turning point”.

Making a pre-budget statement this week in advance of the big day on 5 December, Cowen delighted opposition parties by admitting that economic growth forecasts are now lower than expected, paving the way for a budget far removed from the largesse displayed almost 12 months ago. Cowen said he expects the economy to grow 4.75% in the year to the end of 2007, compared to a previous forecast of 5.25%. Next year, he expects growth to drop to 3.25%.

It’s certainly a significant fall on a percentage basis (a 38% drop from 5.25% to 3.25%), but not one to be overly concerned about. Even averaging growth of 3.25%, Ireland’s economy is outpacing most of its western European counterparts, which still enviously eye the IDA’s ability to lure foreign investors, and the sustained period of growth Ireland has experienced.

http://www.independent.ie/national-news/this-year-a-turning-point-for-economy-says-cowen-1199620.html

Ireland’s unemployment rate still ranks among the lowest within the EU - 4.7% at the end of September (http://www.cso.ie/statistics/sasunemprates.htm ). While it has risen since 2001, it has been consistently close to full employment levels, and way below comparative EU figures. You also have to bear in mind that the Republic’s economy has absorbed well over 300,000 migrants in the past seven years or so, and the vast majority have found work. Much of that, of course has been in the bloated construction sector, on which the government has been overly reliant. But without jobs, those migrants will likely move on – to home, or elsewhere in Europe, probably keeping real unemployment levels low.

The seasonally-adjusted unemployment rate for the EU-15 members was 6.9% at the end of June, 2007, while only a small number of EU-15 countries, such as Denmark, Sweden and the Netherlands have lower unemployment rates than Ireland.

This week the National Treasury Management Agency, mandated with managing our debt, raised $6bn that will be used to fund on-going infrastructural projects. It was seen as further proof that the state coffers had dwindled and that tax revenue is unable to meet ambitious spending plans. The coffers have dwindled, but the $6bn raised represented just over 3% of the country’s overall GDP, and the country still has the lowest debt levels in Europe – a situation far removed from the days in the 1980s when Ireland had a higher debt level than Mexico (which nearly defaulted to the International Monetary Fund in 1982, and even by 1986 was using two-thirds of its foreign earnings to service its debt pile).

The lesson: shut up and stop complaining. Things have still never been so good.