The collapse of the construction boom has had a devastating impact on the economy with the latest central bank bulletin stating that the building and construction sector has shrunk by over 51% in real terms since the first quarter of 2007.
Professor John Fitz Gerald of the Economic and Social Research Institute reckons that the cumulative fall in GDP over three years has been 12% in real terms compared with between 3 and 4% in the rest of the EU.
One of the key differences with the UK is the much greater dependence of the Irish economy on exports, and its inability to devalue within the eurozone.
Gross exports account for 80% of GDP, and policymakers are pinning their hopes on improvements in competitiveness resulting from the impact on wage costs of the well-publicised austerity measures.
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The building trade is unlikely to grow quickly even though Ireland is less dependent on the UK market than it used to be (the UK accounted for 80% of Irish exports in the early 1970s but absorbs only 18% now), but there is a general feeling that it needs to concentrate more on the expanding markets further east.
Meanwhile, the assets' management bureau, NAMA has begun the transfer of part of the first tranche of some €10bn loans from Anglo Irish Bank.
The discount applied to Anglo's first tranche is expected to be close to 55%, subject to additional data checks and foreign exchange rates at time of the final transfer.
The loans are being acquired in two phases. Over this weekend, NAMA acquired loans with a nominal value of €4bn. The transfer of the residual Anglo loans in the first tranche (some €6bn) is expected to be completed next weekend.
Including the €4bn in Anglo loans, the total value of loans so far acquired by NAMA is €10bn, from five institutions – AIB, Bank of Ireland, Anglo Irish Bank, Irish Nationwide and EBS.
When the rest of Anglo's first tranche is transferred, the total transfer will be €16bn and the overall discount is expected to be about 49%.
This week, international finance experts will gather at the University of Ulster to assess the state of the global financial crisis.
Ulster's Belfast campus will host the Irish Accounting and Finance Association (IAFA) annual conference on May 6 and 7.
Experts from the United States, Canada, the Netherlands, Germany, France, Ireland, England and Wales will gather at the University to examine the impact the downturn has had on industry.
The conference will cover issues from financial management, management accounting, accounting education and accounting in the public sector, and how they have been impacted by the economic downturn.
(BMcC/GK)
