Ahern: Economy can weather storm

The Irish economy can weather the storm created by volatile money markets by sticking to current domestic policies, the Taoiseach said today.

A last-minute cut in US interest rates failed to steady the world’s stock prices amid growing gloom over a possible economic recession.

The Taoiseach said he had been in regular talks on the issue with the Minister for Finance Brian Cowen and Government officials in recent days.

“We are monitoring the situation very closely in order to assess the economic implications for us,” he said.

However, speaking at the opening of an Irish Aid information centre in Dublin, Mr Ahern warned against overreacting to the latest turbulence in the international markets.

“I think our economic polices are well thought out. They are very sound. Our budgetary position is very sound and it can deal with international volatility if we need to.”

The Fianna Fáil leader noted that international stock markets were notorious for exhibiting ’short termism’ whereas the Government has always based its economic plans on long-term objectives

“We have to stick to what is our macro-economic policies and at this stage there is no reason to change any of those policies.”

Earlier Fine Gael demanded that Mr Cowen reveal his strategy to insulate the Irish economy from the current global downturn.

“Minister Cowen must come out of hiding and urgently spell out a credible strategy to forestall a slump and develop our capabilities to cope with the hard times ahead,” finance spokesman Richard Bruton said.

“The Government cannot afford to stick with the complacent habits developed during the years of the debt-driven property boom. After years of soft option politics, indecisiveness and procrastination, this requires some imagination, political commitment, new priorities and new initiatives across a wide spectrum.”

The Taoiseach noted that Ireland currently exports 20% of goods to the US. “America is important yes, but if we stick to our budgetary polices stick to our macro economic polices we just have to weather ourselves through this. It might not be easy but we have to work hard.”

He said the Irish economy remains strong and had natural advantages like a well educated workforce, strong foreign direct investment, flexible markets and a low debt-GDP ratio.

The Irish economy is in a stronger position than during a previous markets crash in 1987 even though there has been a slowdown in overall economic growth and in tax revenue, he added.