# US Recession - how will it affect us?



## shnaek (10 Jan 2008)

I heard this morning on the news that Goldman Sachs and Merrill Lynch have acknowledged that the US economy is now in recession. I work for a US firm, and at the moment they seem to be holding up fine. 
But how do the posters here feel this recession will affect the Irish economy, taking into account our strong ties with the US in terms of multinational investment here?
And how long do you believe the recession will last?
Not to mention the fact that US interest rates will probably be lowered a few times this year, thus devaluing the dollar further.


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## MichaelDes (10 Jan 2008)

shnaek said:


> How do the posters here feel this recession will affect the Irish economy


 


As the Euro strengthens against our main trading partner’s currency to £0.80, the dollar passes $1.50, throw in the ingredients of a credit crunch and mix it all together you produce for Ireland big big trouble. I read before that most Irish exporters can withstand €1.40 to the dollar whilst Germany with lower costs and higher productivity can bear up to €1.80 to the dollar. Any American recession will be mild IMO, but the doubly whammy of the currency markets outside our control leaves us greatly exposed. Many MNC's given the cost base and low dollar must be under serious review. Inflation is the other worry - Germany has 3.3% in December and they're in frenzy about it. If Germany gets its way, as it has in the past and ECB increase rates in Feb say by 0.25%, the currency divergence will become even more difficult to contain. I think all markets are in for serious consolidation in 2008/2009, more so though in Ireland. That is unless someone produces a rabbit out of the hat.


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