The Economy of Irish Republic Essay Example | Topics and Well Written Essays - 2000 words

The Economy of Irish Republic - Essay Example (Christopher T. Whelan 2007 ).However the current position of the slump in the ICT market has caused a temporary slump in the period of 2006-2007.It has been suggested that a policy focusing on retaining a deflated real exchange rate/real wage rate would benefit Ireland in the longer term.towards a macro-economic balance. (Christopher T. Whelan 2007 )In 2001 alone the interest rate was more than 3 % for the economy and it has been brought down recently to pave the way for a better monetary policy based economic performance by marked increase in public finances strengthened markedly and a cut down in the public debt with a surplus in the Foreign trade balance. (OECD 2001-2006)There have been recent strong gains in the disposable incomes and wealth, and investment has improved but there is a marked danger of the labour supply shortage.The better part of the Irish economy is that it has managed a low inflation rate (5%) for the past one decade despite the high fuel prices in the interna tional market and tax increases in tobacco prices and the service sector. (OECD 2001-2006) Inflationary pressures are also coming from the employment sector but have been avoided in the interests of a tight fiscal and monetary policy.However in the face of the promising productivity growth the monetary conditions in Ireland are expansionary based upon the rapid increases in house prices and private sector credit and lending. (Christopher T. Whelan 2007 ) Tax revenues have also been promising in the face of a booming economy and have enabled sizable tax cuts and increases in real spending over the past three years for the business community.There is also an over all increase in consumer spending based on the successful international and EU trade performance of Ireland with in the past few years.Coming back to the interest rates there has been a peak in overall inflation because of the above factors but the nominal interest rates have been accordingly adjusted to adjust to the hazards of inflation without disturbing an overall real increase in disposable incomes The success of the Irish Economy mainly due to the governments attempts at the effective macro-economic policy management. Currently the Irish Economy has a nominal GDP of 180.7 billion. with a real GDP growth of 6% and a Nominal GDP per capita of $44,500. (National Statistics 2006).With an export industry that relies heavily on food processing, beverages, engineering, chemicals, pharmaceutical and construction and an export industry based upon machinery, transport equipment, chemicals, and beverages the country deals mainly with the US and the Great Britain in terms of Foreign trade. (www.imf.org). Popularly labelled as the "Celtic Tiger" the country has witnessed massive GDP growth in the past three years alongwith its progressive industrial policy and massive foreign direct investment. (Honohan, P. and Walsh, B. 2002) The economy did take a slump during the post 9/11 scenario and there was no longer the