Joe Higgins
Question:38 Mr. Higgins (Dublin West) asked the Minister for Finance the action, if any, his Department is taking to offset the effects on the economy of the developing crisis in the world economy. [23678/98]
Written Answers - World Economic Crisis.
Joe Higgins
Question:77 Mr. Higgins (Dublin West) asked the Minister for Finance if he will make a statement on the developing crisis in the world economy; and his views on the way in which it will effect the implementation of EMU. [23677/98]
I propose to take Questions Nos. 38 and 77 together.
Notwithstanding the significant progress which has been made over recent months in stabilising international financial and capital markets, the economic and financial problems besetting many emerging economies continue to be a cause for concern.
The outlook for the world economy in 1999 is for weaker growth but I can find no convincing reasons arguing for a slide into recession. Growth is likely to slacken in the OECD area from around 2.5 per cent in 1998 to about 1.75 per cent in 1999. Growth in the world economy is likely to be anchored by the continued expansion of the European and the US economies albeit at more moderate rates.
As I have said frequently over recent months, Ireland cannot expect to remain immune from the showdown in the world economy. As a small highly open economy heavily dependent on inward investment, Ireland's economic performance is clearly strongly affected by international economic conditions, particularly those in the EU and US. There will undoubetedly be a slow down in export growth. Foreign investment into this country, which has been one of the main contributory factors to our remarkable economic growth over the 1990s is also likely to slow down.
As far as the impact on EMU is concerned, the launch of monetary union will make a significant contribution to the restoration of international financial stability through the maintenance of internal policies within the euro area focused on the achievement of price stability and on the conduct of budgetary policies in accordance with the terms of the Stability and Growth Pact. The increased emphasis on co-ordination of EU economic policies in the context of the establishment of EMU will help maximise the contribution of the EU economy to economic stability generally.