john hurley : recent economic developments in ireland and the outlook for the economy opening statement by mr john hurley, governor of the central bank and financial services authority of ireland, at the presentation of the annual report 2007, dublin, 10 july 2008. * * * you are all very welcome to this press briefing to mark the publication of the annual report of the central bank and financial services authority of ireland. i will briefly introduce my colleagues who join me today. tony grimes, our director general, deputy director general brian halpin, and tom o ’ connell, assistant director general, economics. the annual report describes in detail our activities in 2007, which proved to be a challenging year for the bank, both in terms of our domestic and our euro area responsibilities. in my statement today, i will begin by reviewing current developments in the irish economy. we have seen a substantial adjustment in the domestic housing market, international financial market turbulence and, more recently, the effects of higher oil and food prices. this has led to a greater - than - anticipated slowdown in growth and higher - than - expected inflation. notwithstanding the challenging short - term outlook, we continue to believe that the mediumterm outlook is favourable and that growth should gradually recover and inflation moderate. however, such an outcome is not guaranteed and will require concerted action. current developments in the irish economy the latest cso national accounts data, which were released after the annual report was finalised, indicate that growth in the domestic economy remained robust in 2007 with real gdp and gnp increasing by 6. 0 per cent and 4. 1 per cent respectively, in line with average output growth over the previous five years. while the performance of the irish economy was strong in 2007 as a whole, there was a significant moderation in growth as the year progressed. this slowdown has accelerated considerably this year. while the emergence of a slowdown in the economy was not unanticipated, the loss of momentum has been greater than expected this year. this has arisen from a sharper than expected adjustment in the housing sector alongside a deterioration in the international environment. growth prospects for the next 18 months or so are now significantly less favourable and we will be revising our forecasts to reflect this. overall, it seems likely that both gnp and gdp growth will remain positive this year, albeit significantly less than 1 per cent. although some improvement is in prospect, growth is likely to remain below potential in 2009 at about 2 per cent. the down

economic and monetary union today is like a house that was built over decades but only partially finished. when the storm hit, its walls and roof had to be stabilised quickly. it is now high time to reinforce its foundations. ” this quote illustrates very clearly how the eu reform process often is. it is amid the storm that political pressure rises to undertake reforms that help avoid the house come crashing down ; but we agree that the best time to carry out this type of work is when the sun is shining. when assessing our capacity to face future financial crises, we should not forget that the institutional framework is not yet complete. admittedly, the foundations are not fully and firmly in place, and we should avoid lapsing into complacency. we cannot forget that, as the memories of the crisis fade, the political pressure to undertake reforms also tends to wane. thank you. https : / / nextcmu. eu / wp - content / uploads / 2019 / 10 / the - next - cmu - hl _ do. pdf the report also suggests re - naming the project “ savings and sustainable investment union ", which emphasises the role of funding in promoting the transition to a more sustainable economy. 10 / 10