The chart that bothers me most in Irish context is:
This shows the structural nature of the growth slowdown in Ireland in post-2007 period (based on IMF forecasts through 2018). The period of this slowdown is consistent with the growth rates recorded in the 1980s. And here's the summary of decade-average real GDP growth rates:
Now, keep in mind, in the 1980s and 1990s, Irish growth was driven by a combination of domestic drivers, plus external demand, primarily and predominantly in the goods exports areas. Which means that more of our GDP actually had real impact on the ground in Ireland. Since the onset of the crisis, most of our growth has been driven by the growth in exports of services, which have far less tangible impact on the ground.
Another point to make: current rates of growth for the 2010s are below those in the 1980s and, recall back, the rates of growth achieved in the 1980s were not enough to deflate the debt/GDP overhang we had. Of course, in addition to the Government debt overhang (similar to that in the 1980s) we also now have a household and corporate debt overhang.
If the IMF projections above turn out out be close to reality, we are in a structural decline economically and are unlikely to generate sufficient escape velocity to exit the debt crisis any time before 2025 at the earliest.
This shows the structural nature of the growth slowdown in Ireland in post-2007 period (based on IMF forecasts through 2018). The period of this slowdown is consistent with the growth rates recorded in the 1980s. And here's the summary of decade-average real GDP growth rates:
Now, keep in mind, in the 1980s and 1990s, Irish growth was driven by a combination of domestic drivers, plus external demand, primarily and predominantly in the goods exports areas. Which means that more of our GDP actually had real impact on the ground in Ireland. Since the onset of the crisis, most of our growth has been driven by the growth in exports of services, which have far less tangible impact on the ground.
Another point to make: current rates of growth for the 2010s are below those in the 1980s and, recall back, the rates of growth achieved in the 1980s were not enough to deflate the debt/GDP overhang we had. Of course, in addition to the Government debt overhang (similar to that in the 1980s) we also now have a household and corporate debt overhang.
If the IMF projections above turn out out be close to reality, we are in a structural decline economically and are unlikely to generate sufficient escape velocity to exit the debt crisis any time before 2025 at the earliest.
But of course.....
ReplyDeleteOur post 1987 "growth" was to provide income for the UK and core Europe.
Just look at UK balance of payments data.
Both the UK & France have chosen real goods over income from the rest of the world.
And it is a very dramatic turnaround.
UK income from the rest of the world peaked in Q1 2008.
Now they are choosing German goods ,Norwegian oil and driving the rest of Europe into (energy) surplus to achieve this..
Its sticking out a mile.
The lack of a fair final settlement system is destroying all of Europe (inc Germany) except the UK & France.
The net physical wealth flows into those 2 countries is gigantic.