In recent days, the policy among politicians and central banks of playing down any negatives in the global economic outlook has changed.
Instead, key figures from around the world have spoken openly about the stark danger that the world – and Europe in particular – is in. Fears of a widespread return to recession have not been allayed by problems in Japan and Germany, or by slowing growth in China.
Amongst all the doom-mongering, some of the more positive aspects of the current economic outlook can easily be overlooked. Ireland’s turnaround from one of Europe’s worst performers to its leading light has been left out of recent news stories too often, with newscasters instead focussing on the malingering Trichet affair or other European failings.
The current turmoil in Europe and across the world, though, certainly makes for a justifiable distraction. After months of relative stability and optimism, major change in the eurozone is once again on the cards. German growth is sinking; the head of the IMF has expressed fears that the current situation may be ‘the new normal’ instead of a temporary blip. Italy look to be eyeing the exit once more.
In times such as these, it is understandable that key figures in Europe want to hold up Ireland as an example of what can be achieved. As Mr Draghi maintains that countries need to heed the words of the ECB, its ministers will be disappointed that the Trichet letter casts a shadow over the ECB’s role in Ireland’s success.
At the moment, the Irish economy remains strong in the face of weakness on the continent. It is the only current member of the eurozone that can expect strong GDP growth next year (Lithuania, too, has a healthy forecast, but joins the euro on January 1). In 2016, a few other countries are forecast to catch up: with fellow recent underperformers Greece among them. For now, though, the Celtic Tiger still hunts alone.
With the economy still fragile across Europe, several dangers abound that could yet drag Ireland down. Inflation is edging ever closer to negative territory, and recession looms. Should a misstep materialise for the eurozone in the next 12 months, even Ireland’s steady growth may be knocked off course.
Worse yet, 2015 may see the continuation of a story that has simmered throughout the year: political separatism. In Europe, Belgium and Spain both have major separatist movements ongoing, with differing levels of success. The European elections earlier in 2014 revealed a swathe of brewing anti-EU sentiment, the months since have done little to assuage it.
Perhaps more worrying for Ireland than nationalism in the Eurozone is the UKIP-led attempts to bring about a British exit from the European Union. A general election should be announced for 2015, and David Cameron has promised a referendum on Europe if the Conservatives are victorious. The uncertainty for both the euro and the pound that would be brought about by this occurrence could come to seriously harm Ireland.
To concentrate entirely on factors outside of Ireland’s control would be to do the Emerald Isle a disservice, however. Ireland’s recovery has been led by its own nous and dedication. Irish businesses have outperformed their European counterparts in several key industries. Irish banks came out of the recent European stress tests with a clean bill of health. The ISEQ’s growth has exceeded that of the DAX, FTSE 100, CAC 40, and Dow Jones over the past three years.
If anything, unpredictability has been the ‘new normal’ during this long road to recovery. At the moment it looks unlikely that 2015 will bring any major change to that situation. Ireland must hope that its new found strength can last the storm.
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