Tuesday, 10 February 2009

Is Ireland A Pig?

In a recent post (see post) we introduced the idea of the Mediterranean Economies, which are sometimes unkindly known as the PIGS (Portugal, Italy, Greece, and Spain). We are now starting to see Ireland being associated with this group (now called the 'PIIGS'). The case for the inclusion of Ireland in this group can be summarised in this graphic:

As the Irish economy has gone into recession, it has started to exhibit the characteristics of a Mediterranean economy (high perceived political risk, potential downgrading of sovereign debt, fiscal crisis, expanded PSBR).

However, for the Irish economy to become a full PIG, it needs to exhibit the characteristics of a Mediterranean economy on the upside (low rate of job creation, low rate of poverty elimination). In recent times, the Irish economy has been quite good at job creation on the upside, which is why it was classed as an Anglo-Saxon economy.

If it remains so, then perhaps it is a bit premature to call it a PIG. It would remain the only Anglo-Saxon in the Euro zone.

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