After the housing bust coupled with diminished export demand, Ireland’s markets, and subsequent closed-end fund (CEF), may be stuck in the economic doldrums.

Ireland’s Central Bank projects that Irish GDP will fall 6.9% this year and 3% next year as a result of decreased construction projects and increases in unemployment, reports Colm Heatley for Bloomberg. Unemployment is estimated to reach 14.4% next year.

The government unveiled an emergency budget yesterday, and the country’s budget deficit reached $5 billion, or tenfold, in the first quarter. The Standard & Poor’s downgraded Ireland’s top credit rating this week.

According to Forbes, some key points in the budget include:

• New tax measures will raise $2.4 billion in 2009
• Spending cuts will save about $2 billion
• Ireland will buy the bad debt of banks through a new agency
• Excises on cigarettes will go up by 25 cents per pack

Domestic demand has significantly weakened, which reduced outlook for growth in recent months, according to finfacts. Deteriorating labor market conditions has output diminishing in most sectors.

Consumers are hoarding money in what seems like a precautionary saving, the household saving rate is calculated to double between 2007 and 2009.

International trade has dropped in the downturn and this had an averse effect on Irish exports, which amounts to around 80% of GDP.

• The New Ireland (IRL): down 9.3% year-to-date

Max Chen contributed to this article

Tags: Emerging Markets, Europe, Ireland