Comments on: Price competitiveness deteriorates sharply in December http://www.irisheconomy.ie/index.php/2009/01/23/price-competitiveness-deteriorates-sharply-in-december/ Wed, 16 May 2012 21:49:40 +0000 http://wordpress.org/?v=2.6.3 By: Alan Matthews http://www.irisheconomy.ie/index.php/2009/01/23/price-competitiveness-deteriorates-sharply-in-december/#comment-486 Alan Matthews Mon, 26 Jan 2009 00:45:20 +0000 http://www.irisheconomy.ie/?p=416#comment-486 Jeremy, yes, the high proportion of Ireland's trade with non-euro countries whose currencies have been depreciating against the euro is the main factor explaining the deterioration in relative price competitiveness last month. In fact, the price level here dropped by over 1% in December alone compared to November, whereas it only dropped by 0.1% in the euro area overall, so it is the euro revaluation which is responsible for Ireland's poor performance on the HCI. Unfortunately, the consequences of a loss in price competitiveness make no allowance for whether the loss is driven by internal or external circumstances. The solution remains the same - as long as we are part of the euro zone, competitivness can only be restored either by slower relative growth in nominal wages or faster relative growth in productivity. Jeremy, yes, the high proportion of Ireland’s trade with non-euro countries whose currencies have been depreciating against the euro is the main factor explaining the deterioration in relative price competitiveness last month. In fact, the price level here dropped by over 1% in December alone compared to November, whereas it only dropped by 0.1% in the euro area overall, so it is the euro revaluation which is responsible for Ireland’s poor performance on the HCI.

Unfortunately, the consequences of a loss in price competitiveness make no allowance for whether the loss is driven by internal or external circumstances. The solution remains the same - as long as we are part of the euro zone, competitivness can only be restored either by slower relative growth in nominal wages or faster relative growth in productivity.

]]> By: Jeremy http://www.irisheconomy.ie/index.php/2009/01/23/price-competitiveness-deteriorates-sharply-in-december/#comment-447 Jeremy Fri, 23 Jan 2009 23:11:49 +0000 http://www.irisheconomy.ie/?p=416#comment-447 does sth of Ireland's very high non Euro market abt 40% with the UK i think skew this figure How are we to react to drastic drops in competitiveness when they are out of our control. does sth of Ireland’s very high non Euro market abt 40% with the UK i think skew this figure

How are we to react to drastic drops in competitiveness when they are out of our control.

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