A think-tank has warned that the Irish economy is shrinking faster than any other developed country in the world.
A devastating review by the Economic and Social Research Institute (ESRI) predicted the recession could be twice as bad as initially thought in Ireland.
The body said GDP will have dropped 11.6 per cent between 2008 and 2010 – damaging levels not seen since the Great Depression of the 1930s.
In a dismal assessment the ESRI’s Dr Alan Barrett also said: “It is possible that people like Zimbabwe have bigger contractions, but you know when you’re in trouble when you’re saying at least we’re not Zimbabwe. You’re talking about the biggest contraction in an industrialised country since the Great Depression.”
Instability in Zimbabwe has led the economy to shrink by 45 per cent in five years while unemployment hit 94 per cent in January. On the other hand the ESRI’s dismal forecasts for Ireland warn the economy will this year shrink twice as fast as initially thought and between 2008 and 2010 GDP will plummet by 11.6 per cent.
Only Finland came close to this figure when it dropped by 11 per cent between 1990 and 1993. Dr Barrett said, however, that thanks to years of huge growth in the Celtic Tiger of the late 1990s Ireland’s average economic growth for the last decade would be about four per cent.
Even though there has been talk of ‘green shoots’ elsewhere, Dr Barrett warned they may not bear fruit in Ireland for several years. “I guess we’re all becoming mini-experts on the Great Depression,” he said. “One of the things that I was not aware of about the Great Depression was that there were a series of false starts in the 1930s, around 1936, again green shoots appeared at some times in the 1930s, but they then went.”
Dr Barrett warned high unemployment could continue well into any recovery, as the jobless rate remained at about 15 per cent in the early 1990s following the last recession in the ‘80s.
The Irish Labour Party said that, if the gloomy ESRI forecast proves true, the country could be reliving the massive unemployment of the 1980s.
Finance spokeswoman Joan Burton said: “Irish unemployment peaked in 1985 at 17.3 per cent.
“If the ESRI forecasts prove to be accurate, we could see unemployment breaching even this level by the end of next year, recalling our worst memories of the 1980s. Unemployment is cutting a swathe of social destruction across the country.”