Ahern warns against overreaction

 

Taoiseach Bertie Ahern has stressed the importance of not overreacting to the sharp crash in international stock markets.

Mr Ahern said the Government was concerned about the development but added that Ireland's economy was well equipped to deal with such volatility.

"The Government and myself and the Minister of Finance are monitoring the situation very closely in order to assess the economic implications for us," he said yesterday. "Obviously we are watching what's happening around the world and what's happening in Europe and looking at our own situation."

Mr Ahern added that it was important not to overreact, saying that Irish economic policies were well thought-out and sound. Stock markets were notorious for exhibiting "short-termism".

In Brussels at the meeting of EU finance ministers, Tánaiste Brian Cowen said yesterday it was too early to tell if the Irish economy would slip into recession as a result of the US economic downturn. However, the Irish and European economies were as well equipped as they could be and in a much better position than the US to withstand "unwelcome turbulence".

"We have no current account deficit in the euro area, in fact it is in small surplus, so we are exporting more than we are importing. It is quite the opposite situation in the US where a very large current account deficit has been the rule of thumb for some time," the Minister for Finance said.

Mr Ahern said the Government had always placed its economic plans on long-term objectives and on macro economic policies and at this stage there was no use in changing any of those policies.

Mr Ahern acknowledged that stock-market volatility was not helpful. "At the same time we shouldn't exaggerate developments. It is important that we realise that economic developments in both European Union and the rest of the world aren't dependent on America. We export less than 20 per cent of goods to America. Nevertheless, America is a very important market."

The Cabinet will discuss the volatility in international markets at its meeting today.