As Europe struggles to put together a second bailout of Greece, to supplement the rescue effort launched last year, the crisis may force a second bailout of another indebted country in the region: Ireland.
Dublin, which signed up to an 85 billion euro (76.7 billion pound) bailout from the European Union and the International Monetary Fund last November, is hoping to generate enough economic growth over the next two years to decouple itself from Greece in the minds of investors.
This would permit Ireland to make a full return to funding itself in the debt markets in 2013, after testing the waters in the second half of 2012 with short-term issues.
The outlook, however, is not promising. Concern that Greece will eventually default is keeping the bond yields of weak euro zone states including Ireland so high, and the Irish economy remains so weak, that Dublin risks remaining shut out of the markets for much longer.
"They are trying to put a brave face on it, hoping that the economy will pick up, but the numbers don't look that way," said Alan McQuaid, economist at Bloxham Stockbrokers.
"At the moment we are a long way from where we want to be in terms of bond yields and growth rates."
Irish Gross Domestic Product growth of 1.3 percent in the first quarter, the fastest pace in over three years, masked a large slump in private consumption, while the buoyant exports that drove this performance risk flagging because of a softer economic outlook for key trading partners.
On a Gross National Product (GNP) basis, which may be a more accurate depiction of the local economy because it strips out profits earned by Irish-based multinational companies, output fell 4.3 percent in the first quarter on a seasonally adjusted basis, the fastest drop since current records began in 1997.
Ireland needs domestic demand to take off if it is to persuade markets that its gross government debt, estimated by the IMF to peak at about 120 percent of GDP in 2013 compared to 157 percent for Greece, is sustainable in the medium term.
But people are hesitant to hit the shops with the unemployment rate stuck close to 17-year highs and the country only mid-way through a six-year cycle of austerity.
The national savings rate is around 11 percent, nearly triple what it was in 2008 when the recession kicked in, and the supply of consumer loans continues to shrink.
