Introductions

Financial Crisis It is a situation in which the value of financial institutions or assets drops rapidly. Investors sell off assets or withdraw money from savings accounts

Debt Crisis

The heavy borrowing of many newly industrializing countries that resulted in a prolonged financial crisis Debtor nations might not be able to continue making payments on their loans.

IRELAND

Background Information
Ireland is an island to the north-west of continental Europe. It is the third-largest island in Europe and the twentieth-largest island on Earth.

Geography

Politics

Divided between Republic of Ireland (Dublin) and Northern Ireland (Belfast)

6.4mill (Being 4.6mill in ROI and 1.8mill in NI)

Population

Background Information
Until 2002, the Irish use Irish pound By Jan 1999, pound was succeeded by euro

Currency

Stock Exchange

Irish Stock Exchange Merged with Britain in 1973 - International Stock Exchange of Great Britain and Ireland (now called the London Stock Exchange) Operates 3 markets Main Securities Market (MSM), Enterprise Securities Market (ESM) and Global Exchange Market (GEM)

Agriculture Industry and Service Sector Services, Trades and High Tech Industry Economy Irelands economy has made the transition very effectively as it has been helped by Foreign Direct Investments and the real estate market In the past, Irish practice economic nationalism without much success

Ireland Economic Timeline

Have high trade barriers such as high tariffs, import substitution policy Economic War with Britain Suffers economic inactivity due to mass emigrations Marked that economic nationalism is unsustainable
Early 1987 Economy start to improve 1990s Substantial economic growth (Celtic Tiger) 2000 Become sixth richest country in terms of GDP/capita

1920s 1930s

1950

1987 2000

2008 Present

Financial Crisis

Causes of Ireland Financial Crisis

Celtic Tiger Years (1995 2008)

Property Bubble (2000 2006)

Global Financial Crisis (2007 2008)

Irish Banking Crisis (2008 2013)

Irish Financial Crisis (2008 2013)

Celtic Tiger Years (1995 2008)

Period of rapid economic growth Transform from poorer country to wealthiest

Low corporate tax attracts multinational investment

Led to expansion of credit and property bubble

Property Bubble (2000 2006)

Construction activity grew stronger

Main contributor towards the country incomes

FI increased lending for property more than other areas

FI made external borrowing to provide property loan

Irish Banking Crisis (2008 2013)

Irish banks borrow from abroad for the property market investment GFC freeze the world interbank market Lead to liquidity problem no money to borrow Solvency problem as no money can be provide for new property deals Value of assets decline with property market and liability value greater

Irish Financial Crisis (2008 2013)

Demand for residential property decreases Price of the property market drops abruptly Surplus national budget go deficit of 32% GDP Yields of Government debt increased rapidly Assistance from EU & IMF of 67.5 billion

Impact of Financial Crisis to Country

Anglo Irish Bank
Hidden 87 millions internal loan to executives Further loans between 2 banks over extended 8 years period Considered as Irelands version of Enron

Growth & Unemployment

Severe decline in countrys GDP & GNP High increase in unemployment Lead economy to fall into recession

Property Market
House price falls drastically Property price crash hit Ireland More than the entire gain in Celtic Years erased

How Ireland avoid debt crisis

Ireland protects their country from debt crisis by control inflation

inflation in the country to join EMU must not be higher than 1.5 percent compared to the average inflation rate

How Ireland avoid debt crisis

budget deficit in the country must not exceed 3% of gross domestic product (GDP) of a country.
Interest rates not Euro areas public debt must more than 2% permanent not exceed 60% points compared rescue fund take of gross to the interest stakes in the rate countries in Irish banks that domestic product (GDP) the European remain Union. operational