Will Ireland Continue to Grow?

I am a great admirer of Ireland and especially in the sensible tendency to adopt plain economic thinking to its problems and have covered some of that in this blog. I attribute its growth almost entirely to the sensible economic policies that are now used to explain the rise of this country's citizens from one of Europe's most indigent to virtually its most affluent, all within two decades. In spite of the good economic understanding that its leadership has shown, Ireland's people are now caught in the global recession.

Landon Thomas Jr writes in the NYT here about the tribulations of Ireland by tracing the effects of very low interests rates and the subsequent debt overhang and unprecedented expansion of the real property markets. More particularly, the story focusses on one of the country's most ambitious property developers and the acquisition of expensive real estate whose value in the future is now doubtful.

The rapid expansion of the real estate market was partly supported by the myth that property prices will never fall and it appears that even seasoned investors were fooled by this dictum. To my mind, the business problems being faced by a single developer are not an appropriate metaphor for a dynamic economy like Ireland's. Therefore, my guess is that outcomes will definitely be better for the whole economy irrespective of the outcomes of Sean Dunne's expansion. Granted that immigrants are leaving at the moment but they are bound to return once the economy recovers. It is unlikely though that the properties market will constitute as large a proportion of the economy as it does now. I am certain that growth will return to Ireland.