Ireland will weather a slowdown as the euro falls below par against the dollar

IRELAND is among the eurozone’s best-positioned economies for rising interest rates and a slowdown in global growth, according to an analysis by Dutch bank ING.

The bank said that although the Irish economy – like the rest of the eurozone – is struggling with the impact of inflation, the pandemic and the war in Ukraine, “there is little evidence that the Irish economy is predicting an impending recession in the short term is set”.

ING expects both GDP and private consumption growth to fall sharply next year to 1.3 and 1.2 percent respectively, but cited the strong labor market as a “solid foundation” for the domestic economy.

The bright outlook and benign sovereign debt profile meant Ireland’s borrowing costs were now closer to those of France than those of Italy, Spain and Portugal, the release said.

“Clearly a lot has changed since the euro crisis, when it was en vogue to lump Ireland in with the other major economies of the ‘eurozone periphery’,” said ING Senior Economist Bert Colijn.

“The economy has always had a strong growth profile and that potential has led to a fairly rapid economic recovery. Ireland clearly looks different to the rest of the old periphery now that renewed debt worries reign.”

Eurozone industrial production figures on Friday showed that while things are improving month-on-month as companies work off post-Covid backlogs and recover from the initial war shock, future orders are softening, suggesting a possible downturn in European economy indicates.

The euro also eventually fell below par against the dollar, buoyed by recession fears, high energy prices and better-than-expected US inflation numbers that could force US Federal Reserve Chairman Jerome Powell to hike interest rates more aggressively than planned.

US consumer prices rose 9.1 percent in June, the highest since 1981, although most commentators had expected inflation to ease last month as the Fed hiked.

The likelihood of larger gains supported the dollar against the euro, which has been struggling with economic weakness and an uncertain outlook this year due to the war and energy crises. Ireland will weather a slowdown as the euro falls below par against the dollar

Fry Electronics Team

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