Ireland’s economy and exchange traded fund (ETF) are shrinking under growing pressure of a prolonged recession, but rest assured there is a plan in the works.
A deepening Irish economic downturn because of the global credit crisis and low business confidence experienced a small respite in the third quarter as the gross domestic product (GDP) rose 1.2%, reports Jonathan Saul for London South East. The Irish GDP rose 0.1% for the year compared to analyst forecasts of a 2% contraction.
The gross national product (GNP) fell 0.9% in the same quarter against a 3.5% drop in the previous three months. It is predicted that growth will worsen further in late 2008 and early 2009. Early indicators are showing greater contraction in the fourth quarter and 2009 because of recent changes in the euro exchange rates.
Government forecasts a 3% to 4% contraction in the economy next year, which makes it a record worst recession experienced by Ireland.
So, what’s the plan of attack?
First, the government has put forth a $7 billion bailout of its banking system. The top three banks will get the money, reports Stephen Beard for Marketplace. It’s not without strings: the banks will be required to increase mortgage lending by 30%. It’s a tall order, since property values are falling sharply while unemployment is sky-high.
Next, the Irish Prime Minister Brian Cowen promises a program for the recovery of the economy with a $1.04 billion venture capital fund to boost enterprises and re-orientate the economy toward what Cowen calls the “knowledge economy,” along with wind and hydro energy, according to The Age.
The Irish ETF experiencing the deleterious effect of an economic downturn:
- NETS ISEQ 20 Index (IQE): down 47.1% since Aug. 22 inception