Global Economic News
Celtic Tiger Is a Dead Cat; EU Is No Better
May 6 (EIRNS)Ireland, which had been called the "Celtic Tiger," is looking more like a dead cat. Unemployment has increased to 11.4%, officially, and is expect to rise next year. According to the London Guardian, this is a return to the mass unemployment of the 1980s. Some 388,600 people are claiming unemployment benefits in a country of 6 million. The gross domestic product is expected to fall by 8.3% this year, which will be the biggest contraction of an industrial economy since the Great Depression, according to the Economic and Social Research Institute. The growth rate of the "Celtic Tiger" was based on its offshore financial center, which in turn created a real estate bubble. Now, not only has its financial center collapsed, but real estate prices have collapsed by a third. Its national debt-to-GDP ratio will go from 41% to 58% this year, and is projected to reach 70% in 2010.
Labor Party spokesperson Joan Burton said, "Unemployment is cutting a swath of social destruction across the country. Every community and every sector of the economy has been affected. Every family knows somebody who has lost a job. Some families have lost two incomes, making ends meet is next to impossible."
The collapse in Ireland is being replicated throughout the European Union. The Daily Telegraph (May 5) reported that the European Commission had revised its economic forecast, almost doubling every key figure. Although the figures are still not near reality, they are bad enough. The EC predicts unemployment to reach 11.5%, some 26 million people, which includes a 20% unemployment rate for Spain alone. The European economy, it says, will contract by 4%, with Germany contracting by 5.4%. The Euroland's treaty-mandated 3%-of-GDP limit for budget deficits, is history. They are forecasting an average 6.5% rate, with Ireland reaching 15.6% and Great Britain 13.8%. The only country that will experience growth, according to these forecasts, is Cyprus!
The forecast for the U.K. is grim. The Commission's report says, "the likelihood [is] that economic activity in 2010 will be weaker than envisaged by the UK authorities" and will compound a "very significant" deterioration in public finances. It expects unemployment in the UK to reach 9.1%, over 3 million people.
FAO Head: 1 Billion May Go Hungry This Year
May 7 (EIRNS)Speaking at the Paris headquarters of the OECD, Jacques Diouf, the director general of the UN's Food and Agriculture Organization (FAO), warned again that the number of hungry people might reach a record of 1 billion this year. As a result of the financial crisis, the hungry (those consuming fewer than 1,800 calories per day) will increase by 104 million people in 2009. If these trends are confirmed, the 1 billion mark will be reached. However, said Diouf, "food security is an issue of peace and security," so food production should be doubled before 2050 to align with population growth.
The price of food, despite a global drop of 30% since June 2008, is far above the average of 2006. Also, real prices in developing countries have decreased only by 12-14% since June 2008. And products of basic necessity hardly declined.