The luck of the Irish has run out: After 20 years of spectacular success, Ireland has fallen on very hard times. Some analysts believe Irish gross domestic product will contract by nearly 10 per cent in 2009, with further contraction possible in 2010. The job losses will be huge, and without drastic action, the fiscal deficit could balloon to over 12 per cent of GDP. The Conference Board of Canada's own benchmarking of the economic performance of major OECD countries has seen Ireland plunge to last place from its No. 1 ranking in 2007.
Why is this happening? Certainly the U.S. economic recession has meant a sharp reduction in flows of foreign direct investment, which was a key factor in the rise of the Celtic tiger during the 1990s. But the collapse of foreign investment was not the only factor – and probably not even the main factor – in Ireland's sharp recession.
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