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Irish Inflation Falls Significantly

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The Irish Central Statistics Office has this morning published the latest inflation figures for economy. The Consumer Price Index (CPI) for April is 0.1%, a significant change on the previous reading of 0.7%. The Harmonized Index of Consumer Prices (HICP) version of this number is expected later in the day and is likely to also reflect this slowing in consumer price growth.

The metrics on post bail out Ireland are gradually improving but have a long way to go to converge with the Eurozone averages. GDP growth is for all intents and purposes flat, this however is a welcome milestone considering that at the beginning of the crises the country experienced five consecutive quarters where the economy contracted by over 5%. Current GDP growth readings alternate between small positive and small negative amounts, this volatility is a classic sign of an economy restarting and various institutions are projecting moderate growth for the island economy over the coming year. The European Commission foresees 1.7% expansion while the Irish Government predicts a figure closer to 2.0%.

Unemployment is off the highs of nearly 15% in 2012 to gradually return to the EU average around 11.7%, this figure is predicted to slowly improve over the coming quarters.

The lasting effect of the crises on Ireland’s economy can be seen in the public debt figures. Debt/GDP was 25% in 2008, this has now risen to almost 125% as the country had to simultaneously absorb a large banking debt and a more than significant fall off in GDP.

The troika bailout ensured that austerity measures were put in place to cap the rising debt levels in the Irish economy, this bailout has now ended but it is still likely that there is at least one more austere budget to come for Ireland. Arguments however are now forming that that this small open economy should ease up on austerity and wait for global growth to take hold.

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