Sunday, 28 February 2010

OECD on Ireland's economic outlook

Paul Sweeney: The OECD is the conservative think tank of the world’s 31 richest states. The latest state to join is Chile, and Ireland has been a member for many years.

This article covers Ireland’s rapid economic success as a poster child held up for developing and Central European countries to emulate. Now, however, we are on our uppers.The article discusses how Ireland declined. It is interesting that it put an big emphasis on the loss of competitiveness (which OECD economists, like their mainstream colleagues here, see largely in terms of short term movements in wages) and much less on the mad tax-cutting policies of Mr McCreevy and Mr Cowan during a raging boom. That view would have nothing to do with their economists’ low tax economic bias? They focus on wages cuts and, disappointingly for a research body, focus on anecdotal rumours of wage falls in the private sector, when the evidence is not there in the CSO data to date.

The article does admit that “there are risks associated with such deflation, particularly as falling incomes will make it harder to ease the burden of outstanding debts.” They are also correct when they conclude that “fostering a new period of strong and sustained growth the coming years will be a challenge.”

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