ANOTHER bad week for Europe, featuring sit-ins in Spain, a lowered ratings outlook for Italy and yet another austerity plan for Greece. The Irish, at least, had Barack Obama's flying visit to celebrate, but the spectacle of the American president downing Guinness in a pub in Moneygall did not divert the markets. Irish bond yields scaled new euro-era highs, uncomfortably above their levels when a bail-out package was announced in November. Questions swirl about the country's ability to escape a debt trap similar to the one in which Greece, the first economy to require emergency help, is enmeshed.

According to a report from the IMF on May 20th, Ireland's public debt, which was just 25% of GDP in 2007, is already 96% and is due to reach 111% this year (see chart). A seemingly model fiscal pupil is now at the back of the euro-area class because of the cost of rescuing Irish banks, which has reached 42% of GDP, and a collapse in national output and property-dependent tax revenues.

The IMF forecasts that public debt will peak at 120% of GDP in 2013 but then fall only slowly to 117% by 2016. This dismal prognosis is actually less gloomy than the fund's original assessment in December, which saw Irish debt reaching 125% of GDP. That reflects the fact that the amount of extra support needed by the banks is now estimated at €24 billion ($34 billion) rather than the €35 billion earmarked in the initial rescue package.

A lot has to go right for the plan to succeed in stabilising debt, however. Even more wrenching fiscal austerity is needed to bring the budget deficit down from the 10.6% of GDP forecast by the IMF this year towards more manageable levels. That in itself will hold a recovery back, unless Ireland's exporters can overcome the downward pull from a beaten-up domestic economy. This is not impossible. With exports worth about as much as its GDP, Ireland is an extraordinarily open economy—far more so than either Greece or Portugal, which in April became the third economy to require a bail-out.

Those exports come mainly from multinationals. American firms in particular have long favoured Ireland as a place to set up factories and run service facilities thanks to its well-educated labour force and low corporate-tax rate. Even though last year was wretched for the economy, the number of new foreign-direct investment projects in Ireland rose by 36%, according to a report this week from Ernst & Young, an accountancy firm. By contrast Greece, Portugal and Spain suffered falls. Barry O'Leary, who heads IDA Ireland, the agency promoting inward investment, says that the pain of recent years has helped to make the country a more competitive location.

The IMF is forecasting growth of 0.6% this year—the first rise since 2007—and 1.9% next. Others are less sanguine. In a forecast due to be published on May 31st, Ernst & Young sees a fourth year of contraction, with GDP down by 2.3% in 2011. Neil Gibson, an economic adviser to the firm, fears that the strength of exports will be overwhelmed by weaknesses at home, with consumers and government reining in their spending and domestic businesses unable to raise money for investment. Mr Obama lifted the spirits, but only briefly.