Q&A: So what does the OECD Report really mean?
I thought we were sailing out of the bailout and everything was looking up, what’s this about missing targets?
Ireland has not missed any of the main targets set under the terms of the EU/IMF bailout. However, the OECD has warned that we are set to miss a deadline to reduce the budget deficit to 3pc of the size of the economy by 2015. Ireland has been moving heaven and earth to meet that target.
Is that because we did not cut enough in the Budget?
No, the problem is less about Ireland and more about the global situation. The warning for Ireland comes because the OECD has cut its forecast for gross domestic product (GDP) growth globally by around half a percentage point for this year and for 2014.
It now thinks the world economy will grow by 2.7pc in 2013 and by 3.6pc in 2014.
Ireland relies more than most countries in exports, so a slow down in world growth hits us hard.
Can you back up a minute, who or what is the OECD, and why do we care what they think?
The Paris based Organisation for Co-operation and Development is a type of club for countries, mainly well off countries.
Unlike the EU it’s a fairly loose group, but it has been around for 50 years and has played a significant role in forging common understanding between countries on major policies such as free trade and how taxes are arrived at, though not tax rates.
We care because it is a big, credible, global organisation, and the warning about the threat to the global economy is timely.
Why did they pick on Ireland?
They didn’t, we are just one of the many countries commented on in the latest of the OECD’s twice yearly global outlook reports.
Anything else we should be aware of in there?
The big warning this time around is about the US. The OECD is worried about the impact of the so called US debt ceiling – they want it scrapped.
The report warns that the uncertainty that the political impasse the legal limit to the US national debt creates in Washington is bad for the global economy.
The OECD wants the US to come up with a new, less rigid plan to cut its debt.