INFLUENTIAL GERMAN economist Daniel Gros said yesterday in Dublin that Ireland had a better chance of avoiding default than other bailed-out euro countries.
Expanding on the article published in these pages today, the Brussels-based economist said he estimated the cost of banking losses to reach 52 per cent of gross domestic product, equivalent to approximately €80 billion.
He called the property boom a “super-bubble”. Despite this, Ireland is in a better position than Greece, Portugal and Spain.
Ireland can avoid default because savings were higher than the Mediterranean states, he added. As a result, net indebtedness of Irish residents to the rest of the world was comparatively low, although some attendees at the presentation questioned the reliability of Mr Gros’s figures.
He also discussed the high proportion of wealth held by Irish residents abroad. This largely offset the State’s heavy foreign indebtedness. Unlike other bailed-out states, Ireland can meet its public debt obligations by taxing the foreign assets of residents. He pointed to Bulgaria and the three Baltic economies as examples of countries that recovered from a position as precarious as Ireland’s.
