Celtic phoenix

Ireland shows there is economic life after death.

While the euro zone limps along, growing in the third quarter by a disappointing 0.3% (an annualised rate of 1.2%), one small member of the 19-strong currency club is racing ahead. Less than two years since Ireland exited its humiliating bail-out, its economy is resurgent. Following growth of 5.2% in 2014, GDP rose by 7.0% in the first half of 2015 compared with the same period a year earlier.

Welcome as it may be, the vigour of the upswing highlights the troublesome volatility of the small and ultra-open Irish economy. It is bouncing back, after all, from a deep slump that followed an earlier spell of vaulting growth. The notion that the Irish economy might rebound so strongly would have been dismissed as fantasy only a couple of years ago. Irish banks went spectacularly bust during the financial crisis and required a bail-out of €64 billion ($89 billion), close to two-fifths of GDP. Their woes meant that the Irish state had itself to be bailed out by the EU and the IMF in late 2010. Between its pre-crisis peak in late 2007 and its nadir at the end of 2009, the economy contracted by 11.2% (see chart). A recovery in the following two years petered out and the economy lost ground in 2012 and the first half of 2013.

The Economist

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