IMF says to Ireland "Not so fast", as they lower their growth forecast to below 1% for 2011
IMF cuts Ireland's growth to 0.9% for 2011. This is not surprising. However, what gives me optimism is the reforms coming out of Ireland. Via Bloomberg:
The Washington-based fund said it expects Ireland’s economy to grow 0.9 percent in 2011, down from 2.3 percent estimated by the fund in October. The IMF also forecast 1.9 percent growth in 2012, in a staff report accompanying its agreement to contribute 22.5 billion euros ($30 billion) to an 85 billion-euro rescue effort with European authorities.
“Even this modest recovery is subject to downside risks,” the IMF said, predicting that unemployment would stay above 10 percent through 2015. “The large fiscal adjustment will remain a drag on consumption, as will the unwinding of home-grown imbalances from the boom years -- leading to weak credit growth, continued weakness in property prices and wages, and high real debt burdens.”
Ireland’s ratio of debt to gross domestic product is expected to reach 99 percent by the end of 2010, up from 25 percent in 2007 at the onset of the financial crisis, the IMF said. Debt is expected to peak at 125 percent of GDP in 2013, and it could go higher if the shocks to Ireland’s economy become permanent, the fund said.