It is now official: Ireland has slipped back into recession with a 0.2% fall in GDP in the last quarter of 2011. In Q3 2011, GDP contracted 1.1%, so we now have two consecutive periods of contraction: the official definition of a recession.
But it gets worse. In Q4 2011, Irish GNP (probably a better measure of real national output in Ireland’s case) slumped by a shocking 2.2%.
The reason is that exports have fallen, along with the Eurozone problems. Most of the growth Ireland has had since 2010 has been based on exports.
You can see the record of Ireland’s quarterly GDP here:
Meanwhile unemployment is at 14.2%, and has been stagnating between 14.2% and 14.4% ever since the middle of 2011.
Another development (seen in other nations like Estonia and Latvia that have gone down the path of severe austerity) is that people are leaving Ireland in droves, often the young and unemployed. From 2009 to 2011, some 86,000 emigrated. In 2012, some 75,000 are predicted to leave, figures higher than the last emigration surge owing to economic problems in the late 1980s. That trend can be seen in the video below, describing Irish emigration to Australia in 2011.
Lessons here are obvious: export-led growth is highly unreliable, and it is unlikely a nation will achieve robust, long-term growth by fiscal contraction and domestic wage and price deflation (especially when other nations pursue austerity), which, in any case, guts its domestic sectors.
So much for austerity, the policy prescription of fools and madmen.