Sunshine after the rain

The Economic and Social Research Institute have released their quarterly review of the Irish economy for Spring 2010. Some highlights –

  • The contraction in GNP will stop this year with 0% growth overall, although they are predicting a fall in GDP of 0.5% (this contrasts with a rise in GDP of 0.3% in Q3 2009, while GNP fell).
  • In 2011 growth will return to the Irish economy with 2.75% increase in GNP and 2.25% in GDP
  • Ireland emerges from deflation with CPI inflation of 0.25% in 2010, 1.75% in 2011
  • High unemployment continuing to impact with negative wage growth in 2010 (-3%) and 2011 (-1%)
  • Unemployment rate to peak at 13.75% in 2010
  • Debt-to-GDP ratio to reach 89.5% in 2011

They predict net emigration of 60,000 in 2010 and 40,000 2011, although Constantin Gurdgiev argues that the 2011 figure could be as much as twice as high as opportunities increase elsewhere.

They estimate the total cost of recapitalising the banks to be €33 billion.

“We note that the recapitalisation needs of the Irish banks are now likely to be at least €33 billion, assuming that the State investment in Anglo Irish Bank ultimately amounts to €22 billion. In terms of net cost to the State, a figure of €25 billion is possible.”

  • Gerry Lvs castro

    Why is it that potential immigrants continue to batter ceaselessly on Britain’s door, yet the ROI population continues to flee in frightening numbers?

  • Mack

    Gerry Lvs castro

    It would be interesting to get net figures for Britain. Throughout the Celtic Tiger boom period Ireland had quite high emigration, which was more than matched by immigration (returnees and new immigrants). I think I read once that Britain had the highest emigration rate in Europe (certainly there are ex-pats everywhere). Even with net emigration there’ll probably be significant numbers of new comers..

  • Gerry Lvs castro

    I’ve found this on the Office for National Statistics site:

    The number of people leaving the UK for 12 months or more reached a record high in 2008, with an estimated 427,000 people emigrating. This was up from 341,000 in 2007 and 398,000 in 2006. This rise was as a result of a 50 per cent increase in
    non-British citizens emigrating from 169,000 in 2007 to 255,000 in 2008. Just over half of the 86,000 increase were citizens of the
    A8 Accession countries which joined the EU in 2004.

    An estimated 590,000 people arrived to live in the UK in 2008, the second highest figure on record after 596,000 in 2006. This compared with 574,000 in 2007 and represents a continuation of the level of immigration seen since 2004. Of all immigrants 505,000 (86 per cent) were non-British citizens in 2008.

  • Alias

    The downside of that liberal spiel is that foreign workers have taken 80% of all jobs created in the UK since 1997. Given that Ireland has higher net immigration than the UK, the figure here is likely to be similar (discounting British colonies). Since 2.45 million are unemployed in the UK and with immigrants taking 80% of all new jobs created, that means that the UK will have to create 12.25 new jobs just to get 2.45 off the dole. Good luck with that when Labour have bankrupted your country.

  • Nordie Northsider

    For some years now, I’ve been hearing the mantra: ‘The economy will show a modest recovery in the final half (or else the final quarter) of the year.’ It’s a close relative of ‘the property market has bottomed out’.

  • Mack

    Nordie Northsider –

    For some years now, I’ve been hearing the mantra: ‘The economy will show a modest recovery in the final half (or else the final quarter) of the year.’ It’s a close relative of ‘the property market has bottomed out’.

    Indeed, and of property prices can only go up, the boom is getting boomer. Predicting the end of a trend is the hardest thing to do accurately. But the recession will end sometime. I know that some businesses are beginning to move from retrenchment to expansion.

    It’s worth bearing in mind we had positive GDP growth in Q3 2009 (albeit while GNP continued to plummet). We’ve had positive inflation (rather than deflation) in month-on-month terms for at least 2 (Feb, March) months. That the really big falls in the parts of our economy that were unbalanced (construction / property) have already occured & consumer spending has collapsed. Sometime we’ll hit a new, lower equilibruim and begin to grow from there.

  • Mack

    Some more good news – Retail Sales up 14% in Feb.

    http://www.finfacts.ie/irishfinancenews/article_1019443.shtml

    Driven by sales of new cars..

  • Tochais Síoraí

    Any figures on how much of the net emigration is foreign nationals returning home? The numbers of Eastern Europeans around the place seems to have dropped dramatically and that other popular key indicator of mass Irish emigration i.e reduction of the no. of GAA teams doesn’t appear to be happening.

    It’s certainly not the 1980s by any stretch of the imagination (altho the trditional venues such as the US and the UK aren’t major options any more. The year out in Oz and possibly Canada for certain skilled people are the only big options that I can see).

  • Paddy Matthews

    @Mack:

    It’s worth bearing in mind we had positive GDP growth in Q3 2009 (albeit while GNP continued to plummet).

    Except that it subsequently turned out we didn’t.

  • Paddy Matthews

    http://www.cso.ie/releasespublications/documents/economy/current/qna.pdf

    GDP at constant market prices:

    2009 Q1: 43,118
    2009 Q2: 43,047
    2009 Q3: 42,659
    2009 Q4: 42,111

  • Paddy Matthews

    http://www.ft.com/cms/s/0/00ab4d70-381e-11df-9e8e-00144feabdc0.html

    Ireland fell deeper into recession in the fourth quarter of 2009, with the economy shrinking 2.3 per cent as a result of devastating floods in the west of the country and the continuing decline in building activity following the property market crash.

    Output figures for the third quarter, which had shown a small increase in gross domestic product of 0.3 per cent – prompting predictions Ireland had come out of recession – were also revised downwards to a decline of 0.1 per cent.

  • Mack

    Missed that Paddy – surprised (well, not really perhaps) that the downwards revision wasn’t more widely trumpeted.