Ireland's economic policies are strong enough to withstand uncertainty in the world economy and volatility in stock markets, Taoiseach Bertie Ahern insisted today.
Speaking to reporters in Dublin, Mr Ahern admitted he was "concerned" about the current volatility. He said he and the Tánaiste and Minister for Finance Brian Cowen had spoken "a number of times" in recent days.
Taoiseach Bertie Ahern
"We are monitoring the situation very closely in order to assess the economic implications for us. However, I think it's important that we don't overreact to the latest turbulence in the international markets," he said.
"Our economic policies are well thought out and are very sound, our budgetary policies are very sound. They can and will deal with international volatility if we need [to do] so."
Mr Ahern said stock markets were "notorious" for exhibiting "short-termism".
"It's important that there's proper assessment of the effects and that we don't overreact. However, the Government has always based our economic plans on long-term objectives. We have to stick to what is our macroeconomic policies, and at this stage there's no reason to change any of those policies."
He said it would be interesting to see if today's 0.75 percentage point cut in interest rates by the Federal Reserve in the United States would calm the markets.
"Stock market volatility is not helpful, but at the same time we shouldn't exaggerate developments. Obviously there's much focus today on what is happening in the markets and on how potentially institutions in the US may affect other economies," he said.
"But from our point of view, it's important that we realise that economic developments in both the European Union and the rest of the world aren't as open to America."
Mr Ahern said Ireland would have to manage through what would be "a difficult enough situation" but he believed the policies were in place to do that.
"The basis of our economy remains strong. We have a dynamic, well-educated workforce, we have a very strong foreign direct investment strategy in the country. This year is looking good on that too."
"We have flexible markets which allow us to respond flexibly to adverse developments when they happen. We have a low debt/GDP ratio. So unlike what it would have been 15 or 20 years ago, or even what it was in '87, when we had quite a big crash ["Black Monday" of October 1987], we are in a strong position," Mr Ahern said.
"Even though there has been a slowdown in growth, in tax revenue and public finances, our position is still very strong and very sound. But we have to monitor these developments."
Mr Ahern said the subprime markets don't affect the Irish economy much and that there should not be any "knock-on" effects from that market in the United States.
"America is important, yes. But if we stick to our budgetary policies, stick to our macroeconomic policies, we'll just have to weather ourselves through this. It might not be easy, but we'll have to work harder [to do that]."
The eurozone economy is equipped to deal with the world financial market turbulence, Minister for Finance Brian Cowen said today.
"There are differentiations to be made between the US and the European economy," he said.
"We are as well equipped as we can be to withstand the unwelcome turbulence that has to come stock markets for example in the last 24 hours or more."