Davy on the Irish Economy: Economy to grow by 4% in 2011

Euroland

Davy on the Irish Economy: Economy to grow by 4% in 2011

http://www.davy.ie/content/pubarticles/dotiecr20090929.pdf

Would you support their view on the future of Irish economy? Personally, I share their view.

It is likely that GDP growth will resume at the end of this year, while the GNP growth would resume early next year.

Économiste Monétaire

Euroland wrote: »

It is likely that GDP growth will resume at the end of this year, while the GNP growth would resume early next year.

I'd agree with this point. Not so sure about an exact 4%.

Self fulfilling prophecy perhaps? The more belief in the economy the more growth. Its a huge factor alright.

But, what will actually spur the increase in GDP? Our growing unemployment? What is going to take us back out of the ****ter?

Euroland

Deleted User wrote: »

Self fulfilling prophecy perhaps? The more belief in the economy the more growth. Its a huge factor alright.

But, what will actually spur the increase in GDP? Our growing unemployment? What is going to take us back out of the ****ter?

They (Davy) base their report on the latest statistics and make reasonable assumptions. When it comes to unemployment growth, from national statistics you should already notice that it is nearly bottoming out (the worst month was January 2009) and within a few months would revert to unemployment decrease.

I'm hopeful of a return to growth btw, I'm just asking where Davy see us gaining production and value again? The construction industry has stagnated beyond belief, and that was a huge driver of our economy. The Financial Services sector, also a huge contributor to our output has also seen a serious decline.

I am not trying to stir **** or rock the boat here, I am genuinely asking where the recovery is coming from?

Euroland

Deleted User wrote: »

I'm hopeful of a return to growth btw, I'm just asking where Davy see us gaining production and value again? The construction industry has stagnated beyond belief, and that was a huge driver of our economy. The Financial Services sector, also a huge contributor to our output has also seen a serious decline.

I am not trying to stir **** or rock the boat here, I am genuinely asking where the recovery is coming from?

More likely, from Agriculture, some parts of Industry and Services, with Chemicals, Pharmaceuticals and Live Science sector being in the driver's seat. By the end of 2011 construction sector is also likely to recover slighly, as the property price fall is coming to its end and should bottom out in the next 12 months (or earlier). The property market recovery would spark again the construction sector + some infrastructure projects (i.e. Metro, etc).

Flamed Diving

Deleted User wrote: »

The construction industry has stagnated beyond belief, and that was a huge driver of our economy. The Financial Services sector, also a huge contributor to our output has also seen a serious decline.

Two myths being regurgitated here. Firstly, the booming construction sector was a symptom of our booming economy, not a driver. Secondly, financial services performed the role of lubricating the credit markets in Ireland, but they don't exactly drive growth either, but merely facilitate it.

Hasschu

P. J. Moriarty declared this morning that the oat crop in 2011 would be the best in living memory. He is basing his forecast on the summer of 2011 being gorgeously warm and sunny. The difference between P.J. and Davy is that P.J. does not have a vested interest in the outcome but Davy does. I would attach equeal credence to both statements.

leninbenjamin

Euroland wrote: »

They (Davy) base their report on the latest statistics and make reasonable assumptions. When it comes to unemployment growth, from national statistics you should already notice that it is nearly bottoming out (the worst month was January 2009) and within a few months would revert to unemployment decrease.

it hasn't bottomed out at all. All that happened was a slight decline in the numbers joining the dole queue. It's a sign we're approaching the trough of the wave but it's by no means certain that we're close to bottom yet.

Secondly, you have to factor in that the full effects of the budget contraction have yet to be felt yet. There are a fair few contractors surviving on infrastructure signed before the recession. Once these run out, towards the end of this year middle of next, there could be a spate of new unemployment, particularly within the west.

I'd be hopeful, but I still remain a bit sceptical. My main concern is that i just don't see prospects on the horizon to reduce the current unemployment rate. I think it will be a good few years before we return to a normal growth pattern.

daveirl

This post has been deleted.

silverharp

by default anyone making a forecast on the Irish economy is betting on the US economy. Its way too early to say the worst is behind. How would the forecasts work out if we get a return of the credit nasties?

Flamed Diving

silverharp wrote: »

by default anyone making a forecast on the Irish economy is betting on the US economy. Its way too early to say the worst is behind. How would the forecasts work out if we get a return of the credit nasties?

It's pretty much entirely based on the external economy. If the past 20 years have thought us anything, its that any future growth will be export-driven. AFAIK exports have performed relatively stable compared to the rest of our economy, so if things turnaround nicely for the US/EU, Ireland may be well positioned to benefit from this.

gurramok

Over 50,000 were shoved onto Fas courses from the Live Register it seems? http://www.irishtimes.com/newspaper/ireland/2009/0518/1224246811366.html

Do we have figures on how many were in emplyment month by month or quarter by quarter?

Euroland

gurramok wrote: »

Do we have figures on how many were in emplyment month by month or quarter by quarter?

Yes, monthly figures. You can try with www.cso.ie or, otherwise just google it.

buck65

This just makes no sense. Where is the recovery going to come from. I am no expert but until the banks start lending and re-establishing lines of credit/overdraft most small to medium businesses will remain on their knees. Also re the construction sector, there must be aprox 2 years supply of finoished houses out there, surely these will have to be sold to get builders going again. Without demand there will be little development - without the construction sector taking off again - where will the jobs and the spending come from.
I work in the construction sector (supplier) our current figures are at 1999 levels - we peaked in 2006. Both 2007 and 2008 were on a downward slope before the crash of September 2008. This industry has been in decline for 3 years now. It will never hit the heights of the mid 2000s again.
Don't even start about the ever weakening pound!!
We are not yet at the bottom.

Flamed Diving

buck65 wrote: »

This just makes no sense. Where is the recovery going to come from. I am no expert but until the banks start lending and re-establishing lines of credit/overdraft most small to medium businesses will remain on their knees. Also re the construction sector, there must be approx 2 years supply of finished houses out there, surely these will have to be sold to get builders going again. Without demand there will be little development - without the construction sector taking off again - where will the jobs and the spending come from.

You are assuming the last boom was construction-led? Housing booms are always an after-effect of a real growth boom. Not the other way around. Simply building houses will not lead to sustainable growth, it will simply lead us back to where we are now. Ireland's growth was export-driven in the 1990's, it was driven by a property bubble in the 00's. Let's not return to the latter, shall we?

buck65 wrote: »

I work in the construction sector (supplier) our current figures are at 1999 levels - we peaked in 2006. Both 2007 and 2008 were on a downward slope before the crash of September 2008. This industry has been in decline for 3 years now. It will never hit the heights of the mid 2000s again.
Don't even start about the ever weakening pound!!
We are not yet at the bottom.

The construction sector, despite its size, is thankfully not the only sector in our economy. To be honest, it could do with a significant and permanent contraction. The sheer volume of houses being built at its height was insane, far exceeding expected demand. As you said, it will never hit these heights again. But our export industry has the potential to perform well again, if perhaps not at the late-90's levels again. The strength of the Euro might be a problem, although with the ECB taking part in QE this might change.

Rodgeb

Flamed Diving wrote: »

You are assuming the last boom was construction-led? Housing booms are always an after-effect of a real growth boom. Not the other way around. Simply building houses will not lead to sustainable growth, it will simply lead us back to where we are now. Ireland's growth was export-driven in the 1990's, it was driven by a property bubble in the 00's. Let's not return to the latter, shall we?




The construction sector, despite its size, is thankfully not the only sector in our economy. To be honest, it could do with a significant and permanent contraction. The sheer volume of houses being built at its height was insane, far exceeding expected demand. As you said, it will never hit these heights again. But our export industry has the potential to perform well again, if perhaps not at the late-90's levels again. The strength of the Euro might be a problem, although with the ECB taking part in QE this might change.

Couldnt agree more.

We need to get away from this ridiculous national obsession with property prices, we will not end the recession by selling overpriced houses to each other.

We need to focus on increasing exports to kickstart the recovery.

Anonymous1987

This report was discussed in the Irish Times (Link). ESRI seems to see recovery in 2011 as the most optimistic scenario and highlighted that reductions in costs claimed by the private sector was not reflected in the data.

In my opinion some areas of the private sector are unlikely to cut costs much especially in service areas such as accounting and legal services which will impact indirectly on our competitiveness in export markets.

Économiste Monétaire

I don't think it's too crazy to expect positive q/q real (volume) GDP growth by the end of this year, we nearly had that in the Q2 figures—a flat 0% instead. People celebrated French and German 'recovery' with a 0.3% q/q number; we obviously have lingering problems, e.g. a nasty budget in December and private-sector debt overhang.

I guess it depends how you define 'recovery': technical q/q GDP growth, or when Joe Sixpack can get a job. I was referring to the former in my post above. Keep watching trade numbers; retail trade; industrial production; private-sector credit; new manufacturing orders; inflation; et cetera.

gurramok

Euroland wrote: »

Yes, monthly figures. You can try with www.cso.ie or, otherwise just google it.

Only to June '09. Any up to date figures available? (Google don't have them )

Euroland

Flamed Diving wrote: »

Two myths being regurgitated here. Firstly, the booming construction sector was a symptom of our booming economy, not a driver. Secondly, financial services performed the role of lubricating the credit markets in Ireland, but they don't exactly drive growth either, but merely facilitate it.

+100%

Euroland

daveirl wrote: »

This post has been deleted.

You mix up different isssues in one question

Euroland

Flamed Diving wrote: »

if things turnaround nicely for the US/EU, Ireland may be well positioned to benefit from this.

+100%

Euroland

buck65 wrote: »

This just makes no sense. Where is the recovery going to come from. I am no expert but until the banks start lending and re-establishing lines of credit/overdraft most small to medium businesses will remain on their knees. Also re the construction sector, there must be aprox 2 years supply of finoished houses out there, surely these will have to be sold to get builders going again. Without demand there will be little development - without the construction sector taking off again - where will the jobs and the spending come from.
I work in the construction sector (supplier) our current figures are at 1999 levels - we peaked in 2006. Both 2007 and 2008 were on a downward slope before the crash of September 2008. This industry has been in decline for 3 years now. It will never hit the heights of the mid 2000s again.
Don't even start about the ever weakening pound!!
We are not yet at the bottom.

If you want the positive change you have to change your attitude and perception of the latest developments in Irish economy.

Euroland

Flamed Diving wrote: »

You are assuming the last boom was construction-led? Housing booms are always an after-effect of a real growth boom. Not the other way around. Simply building houses will not lead to sustainable growth, it will simply lead us back to where we are now. Ireland's growth was export-driven in the 1990's

The construction sector, despite its size, is thankfully not the only sector in our economy. To be honest, it could do with a significant and permanent contraction. But our export industry has the potential to perform well again, if perhaps not at the late-90's levels again.

+100%

Euroland

Économiste Monétaire wrote: »

I don't think it's too crazy to expect positive q/q real (volume) GDP growth by the end of this year, we nearly had that in the Q2 figures—a flat 0% instead. People celebrated French and German 'recovery' with a 0.3% q/q number; we obviously have lingering problems, e.g. a nasty budget in December and private-sector debt overhang.

I guess it depends how you define 'recovery': technical q/q GDP growth, or when Joe Sixpack can get a job. I was referring to the former in my post above. Keep watching trade numbers; retail trade; industrial production; private-sector credit; new manufacturing orders; inflation; et cetera.

many of them already switch to uptrend

Euroland

Anonymous1987 wrote: »

This report was discussed in the Irish Times (Link). ESRI seems to see recovery in 2011 as the most optimistic scenario and highlighted that reductions in costs claimed by the private sector was not reflected in the data.

ESRI are always over-pessimistic

Euroland

gurramok wrote: »

Only to June '09. Any up to date figures available? (Google don't have them )

here it is (for September):

http://www.cso.ie/releasespublications/documents/labour_market/current/lreg.pdf

Hasschu

Recovery in the US, TALF, NAMA all straws to be grasped.

http://www.creditwritedowns.com/2009/10/the-recession-is-over-but-the-depression-has-just-begun.html

All is not lost we still have not used the rosary beads.
Granted credit writedowns is his area of specialization and might skew his outlook. However, he is living in an era where debt is mountainous.

gurramok

Euroland wrote: »

here it is (for September):

http://www.cso.ie/releasespublications/documents/labour_market/current/lreg.pdf

Wrong link. I asked for employment stats, they ain't out yet.

Euroland wrote:

ESRI are always over-pessimistic

Thats an overstatement. They have always been optimistic on their forecasts.

Euroland wrote:

If you want the positive change you have to change your attitude and perception of the latest developments in Irish economy.

What are you on about? The poster gives you a few facts and you speak of attitude? :rolleyes:

Anonymous1987

Flamed Diving wrote: »

Two myths being regurgitated here. Firstly, the booming construction sector was a symptom of our booming economy, not a driver. Secondly, financial services performed the role of lubricating the credit markets in Ireland, but they don't exactly drive growth either, but merely facilitate it.

Fair point about construction but I'd be inclined to think that financial services can be a driver of the economy for example much of the work in financial services in the IFSC is administration of international funds not domestic. Of course the primary reason for setting up here is the low corporation tax but that's another story.

Flamed Diving

Anonymous1987 wrote: »

Fair point about construction but I'd be inclined to think that financial services can be a driver of the economy for example much of the work in financial services in the IFSC is administration of international funds not domestic. Of course the primary reason for setting up here is the low corporation tax but that's another story.

Yeah, but do investment banks actually create real capital, or do they make money from money? Do you get what I'm saying?

Anonymous1987

Flamed Diving wrote: »

Yeah, but do investment banks actually create real capital, or do they make money from money? Do you get what I'm saying?

I'm not exactly sure what you mean but I take it you are saying that an investment bank operating in Ireland doesn't necessarily create capital like commercial banks do by making loans and driving growth, rather investment banks operate here simply to outsource their administrative work?

Does that really matter though? they still pay taxes, employ people, perform services and at the end of the day is that not the same as the IT and pharmaceuticals industry? Just like those industries financial services in Ireland is effectively exporting services.

Flamed Diving

Anonymous1987 wrote: »

I'm not exactly sure what you mean but I take it you are saying that an investment bank operating in Ireland doesn't necessarily create capital like commercial banks do by making loans and driving growth, rather investment banks operate here simply to outsource their administrative work?

Well, a commercial bank doesn't directly generate growth by lending money. They simply provide the funds (acquired from net lenders) required for a company to spend on what they deem necessary for their future growth. It is the company that goes ahead and spends the money, creating jobs and the products to sell. Banks merely serve as an intermediary allowing companies to borrow from future potential, and take a slice of the winnings. I don't really class this as generating real capital. Banks are just institutions that warp space/time and take a fee for the trouble.

Anonymous1987 wrote: »

Does that really matter though? they still pay taxes, employ people, perform services and at the end of the day is that not the same as the IT and pharmaceuticals industry? Just like those industries financial services in Ireland is effectively exporting services.

By this broad definition, yes, all economic units are the same. It doesn't explain very much, however.

MrMatisse

Marketing rubbish. Trying to encourage share buying.

Euroland

Here you go. Even such over-pessimists as the Goodbody Stockbrokers now revise upwards their gloomy forecasts:



http://www.finfacts.ie/biz10/Recovery_in_sight.pdf

http://www.finfacts.ie/irishfinancenews/article_1018226.shtml

daithicarr

the banking sector needs to be healthy for economic growth to resume, company's need a line of credit etc. lots of viable businesses are struggling because of lack of capital.

gurramok

Euroland wrote: »

Here you go. Even such over-pessimists as the Goodbody Stockbrokers now revise upwards their gloomy forecasts:


http://www.finfacts.ie/irishfinancenews/article_1018226.shtml

Why trust their forecasts when they have been wrong consistently?

"predicts a contraction in the economy of 1.1% (GDP) for 2010, rising to a growth figure of 2.4% in 2011. (This contrasts with the broker’s previous most recent prediction of a 3.7% contraction in 2010, followed by a 1.2% growth figure in 2011.) "


Your 2nd link is frightening.

"Private sector debt levels will increase to 225% of GDP in 2009 - - among highest of developed world"