Irish Central bank demands further budget cuts
Ireland Central Bank has today reduced growth forecasts for the Irish economy in 2010 from 0.8% in July to 0.2%. The authorities are also cutting their forecasts for next year from 2.8% to 2.4% which if correct is not necessarily the nightmare scenario which some people are predicting for the Irish economy. So how can the Irish Central Bank expect growth of 2.4% while many are predicting a capitulation of the Irish economy?
The truth is that nobody knows exactly what impact the ongoing banking issues will have on the Irish economy and the Irish government budget but the longer it drags on the more effect this will have upon investor confidence in the country. However, all things being well an increase in economic activity, as measured by an increase in GDP, of 2.4% for next year is certainly nothing to worry about. If the situation does worsen in the short to medium term this forecast for the remainder of 2010 and next year will mean absolutely nothing and it will be literally back to the drawing board for the Irish Central Bank and the Irish authorities.
The situation in Ireland will come to a head in the short to medium term although at this point in time nobody can say with complete confidence which way the economy will go.
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