Ireland: IMF redefines ‘modest growth’ out of all recognition
‘Negative growth’ is a well-known oxymoron, but the Director of the Europe Department of the International Monetary Fund (IMF) has taken redefinition to a wholly new level. In an interview with IMF Survey Magazine, Reza Moghadam says that since starting to follow the orders of the Troika (IMF, European Commission and European Central Bank), Ireland has “seen modest growth.”
Unless he means Ireland has seen it taking place in other countries, like perhaps the USA (not quite visible over the Atlantic Ocean, but you know what I mean!), this is a very strange way to describe what has happened to the Irish economy under austerity. I am indebted to Paul Sweeney, Chief Economist for the Irish Congress of Trade Unions (ICTU) who tells me that GDP has dropped by 16.8% since 2007 and GNP has dropped by 22%. Even worse, domestic demand fell by 25.7% between the first quarter of 2007 and the second quarter of 2012. Some growth!
These figures, of course, relate the existing Irish economic picture to the state of the nation at the peak of the boom, before the recession, so it is possible that the IMF is still right, and that the Troika’s measures have turned the economy round. But Paul adds:
“There has been a tiny upward rise in GDP and also on GNP last and this year but when one is up the other is down. Domestic demand is the key and it is still falling.”
Apart from poking fun at the IMF, who are of course now clawing their way back to some semblance of reality with their revelation that cutting public spending damages the economy, is this important? Yes, because while Greece spirals further and further into recession as a direct result of the Troika’s poisonous medicine, Ireland is often held up as a country where the medicine has actually worked. But as Paul’s statistics show, that simply isn’t true.
The Troika negotiated the original Irish bailout in November 2010. As the chart in this blog by Philippe Egger, Director of the ILO Bureau of Programming and Management, there has been some growth in GDP since then (although bear in mind what Paul Sweeney says about GDP and GNP heading in different directions and domestic demand being resolutely downwards). But employment has continued to fall, and unemployment continued to rise, over that period, and now stands at nearly 15%. Some recovery, some growth!