Monday, September 26, 2011

Ireland Escaping the Recession. GDP, GNP, and Consumption are up, but Irish Wages are Down.

This week's Economist notes that the Irish economy expanded at a faster rate then expected in the second quarter. GDP, GNP, and domestic demand and consumption all increased during the same period. Though GDP and GNP increased by only 1.6 percent and 1.1 percent respectively, two quarters of successive growth is a bright spot amidst the doom and gloom of contemporary Europe.

Ireland's economy features a number of characteristics that give it a benefit compared to other nations as they pull out of the recession. It has a highly educated labour force, it is open to free-trade, and the populace speaks English, always a plus in a globalized environment. In addition, the national economy is structured around exports, as they make up about 70 percent of Irish GDP.

Also, corporate taxes in Ireland are very low, and do not seem to be rising like in other nations. Wages too are very low, great news for European employers looking for a hub in Western Europe. But as other countries race to the bottom with regards to corporate tax rates and wages, the entire Euro-Zone may suffer. If consumers in other countries are not making enough money to buy your goods and services, exports and production will plummet.

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