All the forecasts are for another boom year for the economy. But how much will events in Asia affect the outlook for the international economy and for Ireland? Major forecasting agencies such as the International Monetary Fund (IMF) have already cut their predictions for international growth this year and there are fears that a liquidity crisis in the Asian financial sector could shake confidence and growth across the world this year.
One of the striking things about Irish economic growth over the past couple of years is that we have grown at a multiple of the rates of other international economies. This has reflected the impact of strong inward investment, rapid growth in sectors such as electronics and strong productivity gains based on the increasing number of young skilled people entering the labour force.
Many of these factors will continue to boost the economy next year. Already a large number of major investment projects - such as the IBM campus at Mulhuddart - are at an advanced stage of construction.
Total employment looks set to rise rapidly again next year. And while some areas of the electronics sector are facing problems, overall the output of firms in this sector should continue to grow rapidly.
However, the economy cannot remain insulated. If events in Asia do spark an international crisis of confidence, then the economy here is bound to be affected. As we depend on exports to fuel economic growth, then any international downturn is bound to hit the overall growth rate here. And turmoil in Asia could affect specific sectors, for example, hurting many of the big electronics firms which have big investments here.
It is too early yet to predict that the Asian economic crisis will lead to an international economic downturn. The rescue package put together at short notice for South Korea shows the determination of the international community to avoid this happening.
But in the weeks ahead all eyes will be turned east to see whether the steps taken over Christmas go far enough, or whether the Asian flu will prove a long-lasting and potentially infectious disease.
