The Economic and Social Research Institute (ESRI) in Dublin has announced that the Irish economy "remains resilient" and that it will eventually rebound to grow at about 3.75% per year in the medium term. The institute warns that there is a danger that Irish society could "become transfixed by the very real economic difficulties" and miss the opportunity to plan for a better future in the next decade. It insisted that the current downturn in the economy will not inflict any lasting damage to the country's long-term growth potential.
ESRI makes it clear that it remains upbeat about the country's economic prospects despite the current slowdown.
It has conducted its latest two-yearly medium-term review of the economy and taken all issues into account, including the downturn in the housing market, the global financial turmoil, the potential recession in the USA, and the state of Ireland's public finances. It says that it still believes the Irish economy remains fundamentally sound, and is well placed to bounce back when the global situation improves.
Ireland has become very good at selling services abroad, and this is the key reason why it is well placed to recover when the global downturn is over. The institute's findings show that Ireland has developed a comparative advantage in the supply of financial services, computer and IT services and other business services and it expects almost 240,000 additional service sector jobs by 2015, provided competitiveness is maintained.
It says these jobs will more than compensate for about 70,000 expected job losses between agriculture, manufacturing, construction and public utilities.
It also says that demand for housing will remain strong with 48,000 new houses per year still required until 2020. The review warns, however, that although greenhouse gas emissions will be reduced substantially as a result of a new carbon tax, Ireland will still miss its emissions targets by a considerable margin.
The researchers also point out that it is "important for the government to move fairly rapidly to introduce some form of congestion charging" if good value is to be obtained from the huge investment in infrastructure that is now taking place.