There’s a very simple, but brutal equation in world finance and business: Ireland = basket case.

The flow of economic updates from two leading global policy groups, the OECD and IMF, this week have confirmed one thing: Ireland is the worst placed of any of the globe’s major economies and the situation will continue for another five years at least.

Unemployment will rise to where one in six Irish workers are out of a job, national debt will go close to 100% of the economy and bad debts among the banks in property and development loans could reach 40% or more, meaning the financial system as a whole is insolvent.

The two reports paint a picture of an economy that has been wrecked by imprudent lending, especially in property, inept regulation and poor political leadership.

The hangover will be terrible. Very few other major economies will endure the sort of pain and agony that Ireland faces over the next five years or so.

But don’t take my word for it, take that of the IMF in its latest update, and the OECD.

The IMF was very gloomy saying in its annual report saying that the country faces a deeper recession than any advanced economy, while the implosion of the property market and the banking sector will continue to be a drag on growth until at least 2014. Gross Domestic Product is projected to contract by 13.5% in the three years to 2010, by which time unemployment will have reached a crippling 15.5%.

The OECD was slightly more optimistic: “The economy is experiencing a severe contraction as large domestic imbalances correct, compounded by the global downturn and financial crisis. With the recession already well entrenched and further contraction expected, the peak-to-trough fall in GDP is set to reach 14%. Activity will recover in 2010 but at a slow pace.”

“With severe pressure on the public finances, it is appropriate that fiscal consolidation has begun. Substantial spending cuts and increases in taxation are required in the coming years. Problems in the banking sector must be resolved at a reasonable cost. Competitiveness would be restored by lower wages and stronger competition.”

The IMF though was especially gloomy, on Ireland’s stricken banks. They face losses of as much as 35 billion euros ($A70 billion) into 2010 as the economy shrinks at an “unprecedented” pace.

Ireland “is in the midst of an unprecedented economic correction,” the Fund said. “The stress exceeds that being faced currently by any other advanced economy and matches episodes of the most severe economic distress in post-World War II history.”