The end of the recession in 2010

A report has been recently published from Davy Stockbrokers predicts economic growth in the Irish economy in 2010. The Irish economy is set to return to growth in the first quarter of 2010 with the official end of the recession coming in the first three months of 2010. The report also states that the construction industry will continue to shrink until 2011 with unemployment peaking at 14% towards the end of 2010.

The above forecast has been based on a number of the following factors

 Survey Data
 Retail Sales
 Taxation Receipts
 Industrial Production

Consumer spending is likely to increase 1.5% as real incomes stabilises and precautionary saving eases. Export growth is likely to quicken as Ireland benefits from global economic recovery, though the recovery may take longer due to the aspect of the recovery taking longer to make “its impact on the ground”. It is predicted that there will be an expansion in the agriculture, industry and private services while the amount of public services may decline slightly.

The report suggests that the emphasis is on the government to impose the necessary changes in the forthcoming budget. If it reduces costs in order to make Ireland more competitive, then initial recovery is possible.

Despite these initial forecasts, a certain degree of political uncertainty is currently present. With a combination of the following

 Lisbon Treaty
 NAMA
 The upcoming budget

The above forecasts come with somewhat of a health warning. However, the Irish economy retains significant competitive advantages such as

 Taxation
 labour supply
 Regulation

As it begins the task of reducing its cost base premium over its trading partners

Looking into the future, the Irish outlook could be transformed. During the year, government bond issuance has been completed and a minimum of € 2 billion (or 10% of next year’s requirement) will be sourced before year end. A yes with regard to the Lisbon treaty, the implementation of NAMA and a meaningful reduction in public expenditure in Budget 2010 would provide a strong foundation on which economic revival can be built upon.

 

Karl Foley

Press Officer
John McCarrick and Associates
11 Dunville Avenue, Rathmines
Telephone:01 4960102
Fax: 01 4973717
Email: info@jmccarrick.com

 

 

 

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