The Irish economy plunged into a severe recession in 2008, following
a period of unsustainable growth. Housing investment has slumped and
large internal economic imbalances are unwinding, with the effect on
demand compounded by the international financial crisis and global
slowdown. The adjustment, which is underway, will be prolonged and
the economic recovery weak. Irish banks have come under severe
pressure, and major support from the government has been required. The
downturn has revealed a weak underlying fiscal position. The authorities
have already taken important steps to restore stability, but more will need
to be done.