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Ireland far from basket case, says report

Ireland's economic future looks very bright and the country is engulfed by excess pessimism, an influential international report has said.

The latest edition of The Economist magazine says that following a "horrendous correction" the country is extremely well placed to recover.

"Ireland is not about to return to the dark days of the 1980s. Numerically, the recession has sent living standards back only to 2002 levels. The flexible economy will remain attractive to multinationals seeking a toehold in Europe, especially if it keeps its low corporate tax rate."

The painful pay corrections has led to a slimmer, fitter economy.

"Unlike other European countries, Ireland is regaining competitiveness by reducing unit labour costs. Exports are booming and there should be a current account surplus this year for the first time in over a decade," it said.

The Economist said that while the domestic consumer market remained alarmingly weak, not all of the progress made since the mid 1990s had been lost.

"Not all of the Celtic Tiger gains have been squandered. An optimistic entrepreneurial spirit emerged that will not be crushed by a few years of recession. Higher education has expanded dramatically; a generation has grown up knowing nothing but prosperity. The country has been overcome by excessive pessimism," the report added.

However, not everyone is as positive as The Economist. Jim Power, chief economist with Friends First, said while there were positives, such as exports, Ireland still had a long way to go, with further pain unavoidable.

"Every time we seem to get a positive sign, we always get drawn back to the issue of the banks, and the never-ending black hole. Savings are high but consumer demand has been decimated and shows little sign of returning soon."

Mr Power also said that recent demonising of business owners and entrepreneurs by unions and other left-wing commentators was absurd, given that these were the people who would create jobs and grow the economy.

UL economist Stephen Kinsella said that jobless export growth matters little when the domestic economy remains stagnant and that steps must be taken to encourage consumers to spend money.

"A new government may get some small movement on the EU/IMF deal, but it's only a drop in the ocean in terms of what has to be done," he said.

Sunday Independent