Every country in this world is facing some sort of economic crises due to overall economic recession, however the Case of Economic Crises in Ireland has an interesting History as nearly four years back in 2007 this country was being considered as most developed economic and sort wise country as was able to achieve remarkable economic growth and also surprisingly low unemployment rate (Whelan, K, 2011)
The overall progress of the country was amazing as its GDP ratio in 2007 was approx 25% and its foreign reserves were more than 5000 Euro, however this was the glimpse of Ireland financial condition of four years ago and currently the country is in the severe Dept crises as its GDP ratio has decline and almost all the foreign reserves are lost. In this report the main focus will be identified the reason of this economic crises, its impact and future plans of overcoming this crises.
Rise and Fall Irish Economy
The most interesting aspect of Irish economy was that it was previously termed as “Celtic Tiger” due to its remarkable performance in every economic and social aspect, but this fame and respect ended in a total collapse due to following factors namely the Housing crises and the Banking Crises, it was generally observed that the economy boom of the Irish was due to it highly defined credit history but it would underestimate the true factors that really contributed in the Economic Growth of the country (Whelan, K, 2011)
The Boom in the Ireland Economy
The boom in the Ireland economy started in the early 1980 and reached at its peak in the year 1990 and above as it could easily be observed that in the mid of 1980's the overall GDP of Ireland was more that 110 percent and the government of the Ireland at that time used to pay 10 percent of the GDP in interest payment.
The economy of the country faced a slight debt problem in the late 1987 but due to effective economic policies and governance this problem was controlled and in a few months the Debt of Ireland was at a sustainable position, during the same period the government of the country received a loan package from EMS as it provided a great support in the monitory stability, hence it was observed that due to macroeconomic stability and effective policies the economy of the country was in the state of remarkable growth and was looking well established, economic growth of the country could be seen in the graphs (Whelan, K, 2011).
However this phase of growth remained for a short period of time after 2007 as the Irish economy faced an unexpected Sovereign Debt and Banking crises that ultimately destroyed the overall progress of the country (Whelan, K, 2011).
Crises of Sovereign Debt
The prime factor of the growth in the Irish economy was its construction sector and after witnessing the success the government of the country further invested the huge amount in that industry with an expectation of ...