linked to the us subprime residential mortgage sector. international economic growth against the background of the problems in global financial markets, there have been downward revisions of economic growth across many countries. this has occurred because of concerns over the scale of the losses being incurred by the banking sector internationally and the potential for knock - on effects in terms of a lower availability of funds for borrowers and a higher cost of credit. many surveys of banks ’ current credit standards indicate that they have been tightened because of the financial market turbulence. on a practical level, this means that it is more difficult to borrow funds for consumption and investment and, as a consequence, globally there could be relatively less economic growth. it is estimated by the international monetary fund that the global economy expanded by 4. 9 per cent in 2007 and will grow by 3. 7 per cent in 2008. this latter projection is significantly lower than forecast last october. there are increased signs that the deterioration in the us housing market is starting to spill over to the broader economy and the outlook for consumer spending appears to have weakened. many observers are of the view that the us economy may experience little or no growth for some time. despite continuing problems in financial markets, the latest economic data remain consistent with moderate but ongoing real gdp growth in the euro area. while growth is expected to moderate somewhat from its 2007 rate, euro area economic activity is still expected to continue to expand this year. however, the risks to this outlook would appear to be on the downside. they arise from the significant uncertainty related to the problems that financial markets are experiencing and the risks surrounding the global growth outlook. for instance, the implications for growth stemming from developments in the united states remain highly uncertain. the full implications of financial market developments for the us economy, and subsequently for the global economy, may not be fully apparent yet. hopefully, the initiatives discussed by the g7 last weekend will help reduce these uncertainties. turning to price developments in the euro area, sharp increases in food and energy prices have had a significant impact on the harmonised eurosystem inflation rate in recent months, pushing it well above 3 per cent. the headline rate is expected to moderate gradually over the course of the year, but the risks to the outlook are clearly on the upside. looking ahead, the ecb governing council has signalled that it will continue to monitor very closely all developments over the coming weeks. implications for the irish economy the outlook for the irish economy in 2008 is undoubtedly more challenging now than

alan greenspan : the widened trade deficit of recent years, in the context of a prolonged bout of job loss in the united states remarks by mr alan greenspan, chairman of the board of governors of the us federal reserve system, before the world affairs council of greater dallas, dallas, texas, 11 december 2003. * * * interest in issues of trade, tariffs, and protectionism has ebbed and flowed in this country since our founding. the widened trade deficit of recent years, in the context of a prolonged bout of job loss, has again elevated cries of distress to special prominence. the sensitivity of our economy to foreign competition does appear to have intensified recently as technological obsolescence has continued to foreshorten the expected profitable life of the nation ’ s capital stock. the more rapid turnover of our equipment and plant, as one might expect, is mirrored in an increased turnover of jobs. a million workers leave their jobs every week, two - fifths involuntarily, often in association with facilities that have been displaced or abandoned. a million, more or less, are also newly hired or returned from layoffs every week, in part as new facilities come on stream. related to this process, jobs in the united states have been perceived as migrating over the years, to low - wage japan in the 1950s and 1960s, to low - wage mexico in the 1990s, and most recently to low - wage china. japan, of course, is no longer characterized by a low - wage workforce, and many in mexico are now complaining of job losses to low - wage china. in the united states, conceptual jobs, fostered by cutting - edge technologies, especially information technologies, are occupying an ever increasing share of the workforce and are gradually replacing work requiring manual skills. those industries in which labor costs are a significant part of overall costs have been under increasing competition from foreign producers with labor costs, adjusted for productivity, less than ours. this process is not new. for generations american ingenuity has been creating industries and jobs that never existed before, from vehicle assemblers to computer software engineers. with those jobs come new opportunities for workers with the necessary skills. in recent years, competition from abroad has risen to a point at which our lowest skilled workers are being priced out of the global labor market. this diminishing of opportunities for such workers is why retraining for new job skills that meet the evolving opportunities created by our economy has become so urgent in this country. a major