2008 OECD Economic Surveys: Ireland 2008

image of OECD Economic Surveys: Ireland 2008

This 2008 edition of OECD's periodic survey of the Irish economy finds that it has performed remarkably well over the past decade, propelling per capita income to above the OECD average. Economic fundamentals remain strong, but economic activity is now easing. The survey examines some of the key challenges Ireland now faces including maintaining growth, the housing market slowdown, financial stability, adapting government spending to slower revenue growth, reforming the pension system, and integrating migrants.

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Key challenges

Strong economic activity has been maintained and economic fundamentals remain sound. The end of the long housing expansion will, however, slow growth and presents more difficult challenges than in recent years. In the short run, the economy must adjust to lower housing activity and the risks the slowdown creates. In the long term, maintaining high rates of productivity growth is the key challenge. It is important that Ireland remains internationally competitive. Policy can support productivity growth through achieving stronger competition, improved infrastructure, more innovation, increased human capital and higher labour market participation. Ireland should ensure the stability and sustainability of its economic and social gains. A more efficient housing market would contribute to greater stability and recent international financial market turmoil highlights the need to continue to prepare for financial shocks. Maintaining a prudent fiscal policy as revenue growth slows will help to promote stability, although this will require more efforts to improve efficiency if services are to be improved. Ageing will eventually pose significant challenges that can be reduced if action is taken now to prepare the pensions system. Successful long-term integration will help to ensure that immigration is a success.

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