Irish economy in sharp contraction

Gross domestic product shrinks significantly by 7.5 per cent in final quarter of 2008.

    Ireland is currently suffering from deflation, with prices falling significantly [EPA]

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    Ireland rocked by more gloomy financial data 

    Announcing its decision on Thursday, the commission said: "In addition to difficulties caused by the global financial crisis, recent developments with regard to the sharp decrease of Bank of Ireland's shares' value increased the need to reassure the financial markets of the bank's stability."

    The former "Celtic Tiger" Irish economy is undergoing its first recession since 1983.

    The country, which experience a prolonged period of double-digit growth in the 1990s, is now suffering deflation, with prices falling 1.7 per cent on a 12-month basis after a drop of 0.1 per cent in January.

    Deflation is detrimental to the economy, because it encourages people to delay purchases in the hope prices will drop further in the future.

    SOURCE: Agencies


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