The Economist's view of the Irish economy

The Economist Intelligence Unit gives their forecast for the Irish economy 2008-2009. It does not make for pretty reading.

* We expect the multi-party coalition, formed in June 2007, to remain in office over the outlook period. There is a limited risk of the arrangement collapsing, with the Green Party the most likely participant to withdraw.
* Apart from environment-related policies, we do not expect the new administration to hasten the pace of reform, largely because of differences on policy and the power of vested interests to block change.
* Despite an estimated increase in the euro area inflation rate to 2.6% in October, the European Central Bank (ECB) is not expected to increase interest rates above the current rate of 4%.
* The fiscal position is deteriorating, and this will place constraints on government expenditure. A deficit is expected by 2009.
* GDP growth is expected to slow sharply in 2008, mainly because of the ongoing slowdown in the previously overheated property sector. However, there is a real risk of recession.
* Unemployment is expected to rise over the outlook period, as the construction sector shrinks, but inflation and the current-account deficit will both fall.

The Government can call the EIU doomsayers if they like, but the facts speak for themselves.