Ireland - the eurozone’s model pupil - fails the test

Ireland has always been "tipped as the eurozone's best chance of a bail-out success story", says Jamie Smyth in the Financial Times. But GDP shrank by 0.6% in the first three months of the year, and the latest revisions to previous figures show that growth has actually contracted for three successive quarters now.

Ireland profited from an export-led recovery after its bail-out in 2010, with foreign sales offsetting the debt-soaked domestic economy. But the reliance on exports is taking its toll now that the rest of Europe has fallen into recession and the global economy remains tepid. Exports of goods and services declined by 3.2% in the first quarter. "Unless there is some recovery in Europe then Ireland won't enjoy a sustainable recovery," says Alan Barrett of Ireland's Fiscal Advisory Council.

The economy looks unlikely to expand this year, and the budget deficit is still 7.6% of GDP. So worries over the fiscal outlook and still-huge debt pile could well intensify to the extent that Ireland could need help beyond its scheduled exit from the three-year bail-out programme in December 2013.

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