Medium Term Prospects for the Irish Economy

smithirl

What would these mainly be? I can only really think of Exports and possibly tourism?

mistermouse

I would think the possibilities are few and far between, the Government and Media talk about the Exports as if its something great, its not and far outweighed by the total collapse of the general economy

On the streets, in shops and businesses, this country is much worse off than in was a year ago.

As for Tourism, quite alot of the small businesses and tourism businesses will not be able to survive this year never mind more budgets or the fact that the whole scenic and social fabric of the country has been decimated in recent years, not to mention the cost of travelling around this small country

What galls me is that the politicians that have, and are currently doing this to our country will always be looked after and be really weathly as the rest of the country continues to decline

RichardAnd

I try to keep optimistic but I see very little to warm my heart in the world around me these past months. One way or another, I think Ireland is in for an extended period of stagnation. To be honest, I get depressed thinking about it sometimes.

Max Powers

yes, it is depressing, im not optimistic we will be coming out of this until 2020 approx. What really gets me is that the top civil servants, politicans and the judiciary have basically taken tiny cuts. It looks like the EU thinks this too. As i heard on the radio, some lad saying 'why is the likes of Leo varadker earning more than David Cameron'.

Nijmegen

2020 may be optimistic. I think the hangover of this depression will last into the 2030's, because the debt overhang is so large and because we are today sowing the seeds of future economic stunting.

How will our economy fare in 2032 when the child who starts school this September will have come through our failing education system (remember, the OECD school rankings already puts us at 17th, down from 5th, in the world rankings; and a quarter of Irish 15 year olds are functionally illiterate) and out to the world of hi-tech jobs?

I think that a lack of truly long-term thinking and reform at this stage is going to screw us well into the next decades. But so long as it doesn't dent politicians chances in four years time, who cares?

djpbarry

mistermouse wrote: »

...the Government and Media talk about the Exports as if its something great, its not and far outweighed by the total collapse of the general economy

What do you mean by the “general economy”? Seems to me that Ireland’s record levels of exports indicate that the “general economy” is actually doing pretty well.

mistermouse wrote: »

As for Tourism, quite alot of the small businesses and tourism businesses will not be able to survive this year...

The number of visitors to Ireland increased by almost 6% in 2011?

Peter_2002

djpbarry wrote: »

What do you mean by the “general economy”? Seems to me that Ireland’s record levels of exports indicate that the “general economy” is actually doing pretty well.
The number of visitors to Ireland increased by almost 6% in 2011?

Stop believing the main stream media and government spin

djpbarry

Peter_2002 wrote: »

Stop believing the main stream media and government spin

Oh I'm sorry - where should I be going for real data on Ireland's economic performance? Average Joe?

later12

smithirl wrote: »

What would these mainly be? I can only really think of Exports and possibly tourism?

A significant improvement in indigenous investment and a marked improvement in consumer sentiment over the medium term is also anticipated by the various economic authorities.

But because of the ingrained nature of the bulk of the Irish deficit, the Government has to look to more than just anticipated growth, which is why the public expenditure and revenue consolidation is so important as well. Growth alone was never going to cut the mustard.

djpbarry

later12 wrote: »

But because of the ingrained nature of the bulk of the Irish deficit, the Government has to look to more than just anticipated growth, which is why the public expenditure and revenue consolidation is so important as well. Growth alone was never going to cut the mustard.

But I think there is definitely a conflation in the public consciousness of the economy with the deficit. While reduction of the deficit is obviously dependent to some extent on economic growth, there seems to be a determined unwillingness to accept that things in Ireland really aren't that bad and there is some cause for optimism.

Geuze

Here are two outlooks for the Irish Economy:

http://ec.europa.eu/economy_finance/publications/occasional_paper/2012/pdf/ocp93_en.pdf



http://www.imf.org/external/pubs/ft/scr/2012/cr1248.pdf

See pages 25-31, and weep.

mike.l

Geuze wrote: »

http://www.imf.org/external/pubs/ft/scr/2012/cr1248.pdf

See pages 25-31, and weep.

Actually looks quite promising if GDP is the correct yardstick for recession, GDP dipped as low as -7.0 in 2009, I think -10.0 is officially a depression so perhaps we didn't go that far, but positive GDP for 2011 of 0.9 is very promising and I feel very optimistic we have turned a corner!

n900guy

Max Powers wrote: »

yes, it is depressing, im not optimistic we will be coming out of this until 2020 approx. What really gets me is that the top civil servants, politicans and the judiciary have basically taken tiny cuts. It looks like the EU thinks this too. As i heard on the radio, some lad saying 'why is the likes of Leo varadker earning more than David Cameron'.

I think picking a year is pointless; the economic problems in Ireland will resolve if a stable economy is developed. There is also the same recession in Netherlands, Finland, Germany, etc., . We have never developed a stable economy except perhaps the pharma industry in Cork.

So to say 2020 that presumes a job market being present, then take a college leaver who has a degree in e.g., IT, engineering or something. They started in 2016. That means they are now going into the Junior Cert cycle. Is such a scenario now being developed to put people aged 15-16 into an environment with access to work experience and are industries being encouraged to develop now that will lead to a workforce in 2020? I think not. Most of the work that went into creating access to a stable economy by the mid-1990s took 20 years of the previous (now retired) generation. All of that social and educational capital has been spent; unless we see the government planning 10yrs+ for developing stable industries, there will be now improvement. Default is what you have now - a bad economy, lots of debt and a series of government unable and unskilled with improving the lot of citizens. Our standard level is where we are currently at.

djpbarry

Geuze wrote: »

Here are two outlooks for the Irish Economy:

http://ec.europa.eu/economy_finance/publications/occasional_paper/2012/pdf/ocp93_en.pdf



http://www.imf.org/external/pubs/ft/scr/2012/cr1248.pdf

See pages 25-31, and weep.

What specifically should we be weeping about?

n900guy wrote: »

We have never developed a stable economy except perhaps the pharma industry in Cork.

There is a pharma industry outside Cork too, you know. There’s also a well-developed semi-conductor manufacturing industry (and other computer hardware), medical device production, as well as software development and, of course, agriculture and food products. That’s a reasonably solid basis for a stable economy right there.

n900guy wrote: »

Is such a scenario now being developed to put people aged 15-16 into an environment with access to work experience...

15-16 year olds should be in school, not on work placements.

n900guy wrote: »

...and are industries being encouraged to develop now that will lead to a workforce in 2020?

What do you mean by “encouraged”? What encouragement is required? Ireland already has a low corporation tax rate and cheap office space is becoming a big attraction:

http://www.bloomberg.com/news/2012-02-21/dublin-office-market-set-to-revive-as-facebook-google-add-space.html

Add to this the fact that science and engineering third level courses received record levels of applicants this year and I see very little reason to be pessimistic about Ireland’s future economic prospects.

n900guy

djpbarry wrote: »

What specifically should we be weeping about?
There is a pharma industry outside Cork too, you know. There’s also a well-developed semi-conductor manufacturing industry (and other computer hardware), medical device production, as well as software development and, of course, agriculture and food products. That’s a reasonably solid basis for a stable economy right there.

There is, but not over a 20yr+ period, for example like auto industry in Germany. Something that is maintained generation to generation. Same with the likes of Samsung and LG in South Korea. When I say encouraged I mean encouraging industries that can be sustained; instead, government encourages property development through taxbreaks.

15-16 year olds should be in school, not on work placements.

That's not addressing the issue. Netherlands, Germany and many other countries have particular secondayr school pathways for those going to work for example in manufacturing, etc.,. Not everyone needs to go to university and those other stable countries with sustainable industries recognise this. For example, the vocational training pathways in Nethrelands (MBO), or the Hauptschule/Gymnasium/Realschule pathways in Germany. Well done on presuming every 15-16 year old is identical

What do you mean by “encouraged”? What encouragement is required? Ireland already has a low corporation tax rate and cheap office space is becoming a big attraction:

And the result of that has been exploitation of the attractive tax environment by multinationals but very little homegrown industries. Office space is not cheap in Ireland. Saying it's a "big attraction" is not connection reality of the outcome of government policies for the last 15 years.

Add to this the fact that science and engineering third level courses received record levels of applicants this year and I see very little reason to be pessimistic about Ireland’s future economic prospects.

Many of whom will subsequently be unable to find work here when they finish becuase the requirements to get employers to come here to new employers to start or entrepreneurial paths simply are not there now - which is precisely what someone in year 3 of a 4 year degree needs to see or else they will move to someplace they will be able to continue. These record numbers will be doing their work placements in what science/biotech/engineering companies? Or will they see an easier route abroad after 2-3 years in their degree?

There is no joined up thinking in your response in my opinion.

djpbarry

n900guy wrote: »

There is, but not over a 20yr+ period...

I think Irish agriculture has been around for slightly longer than 20 years.

n900guy wrote: »

Not everyone needs to go to university...

I’m not suggesting that they do, but I think it’s important that everyone should have the opportunity.

n900guy wrote: »

Well done on presuming every 15-16 year old is identical

I never said any such thing. I just don’t think that sending different kids down different educational paths so early in their lives is a terribly good idea.

n900guy wrote: »

Office space is not cheap in Ireland.

Actually, it is. Office rents in Dublin, for example, have fallen by more than 50% in the last 5 years.

n900guy wrote: »

Many of whom will subsequently be unable to find work here...

I’m pretty sure a lot of them will. Contrary to popular belief, there are jobs available in Ireland at present and the industries I’ve listed above aren’t showing any signs of halting their expansion. Furthermore, an abundance of maths, science and engineering graduates will attract foreign investment.

Voltex

One area not mentioned is the food production sector. Once the CAP comes to an end the potential for Ireland to be a leading, if not the leading dairy/agri nation is staggering. The New Zealand dairy economy basically sets the world market prices atm..but Ireland will be a major competitor in the years to come...

Sand

Its difficult to see where the growth is going to come from in the next couple of years tbh.

Lets look at the generally accepted inputs for economic growth - capital, labour, technology.

Firstly, the ECB has pushed the inflation button with its LTRO injection of 1 trillion euro into European banks. However, theres no guarantee those banks will actually inject it into the wider European economy. They may simply invest in Asia, South America and Africa instead. The ECB also has not officially abandoned its target inflation rate of below 2%. It has missed this target for a long time now, and if it hasnt abandoned the rate (theres *a lot* of discontent in the ECB about that already) then one has to assume the ECB is going to jack up interest rates as soon as it thinks it can get away with it to compensate - if anyone thinks the ECB isnt that stupid, remember the ECB was jacking up interest rates all through 2007 and 2008 - exactly the wrong time to do so.

Ireland is already struggling in an enviroment of extremely low ECB interest rates - and those rates can and will only go higher.

The Irish banking system is essentially Japanese. Exactly as warned by those who councilled against keeping dead banks upright, the Irish banks have zombified. There is no lending and there is no borrowing as the dead banks abandon their day to day credit function in favour of parastically sucking the lifeblood out of the economy they are supposed to service.

Irish capital in so far as it exists has been sunk into the greatest property bubble and crash in modern history - the irish case will be in the economic textooks with the original Dutch tulip mania.

Meanwhile, new foreign capital, in the form of FDI is not as important as it was previously - we have already been wildly, wildly successful in attracting US investment here all through the 1990s. However, now its 2012. The big wins have already been secured. If anything, Ireland is now under threat from lower cost, EU locations. For example - I've worked in Poland and with Polish people in Ireland and found three things to be true:

- The Polish have a highly educated workforce
- The Polish have a hard working workforce
- The Polish have an English speaking workforce

Yeah, thats Irelands three famed advantages dead to rights. The only thing we have going for us right now is the low corporate tax, and eastern European countries are learning from our example. Poland has a flat corporate tax rate of 19% for example - with vastly lower wages. Start doing the maths - any new sources of FDI, and our existing "wins" will be doing the maths already...

So thats the situation for capital.

With labour/human capital, Ireland comforts itself that the Irish education system is the best in the world. This is a self awarded title that has no empirical evidence to support it. Whilst monocultural Irish students were quite accomplished vs the strains other nations (UK, France, US, etc) has in accomadating multi-cultural students and backgrounds, Ireland is no longer monocultural and the lazy self confidence has evaporated as Irish teachers have suddenly found themselves struggling to teach classes of students from a variety of backgrounds and continents. When the Irish education system is exposed to the same strains as its competitors, its supposed excellence vanishes...even

And where has Irish labour gone in the past 10 years? Out of the education system and onto a building site as soon as legally possible. Theres an entire generation of young Irish people who have wasted their youth training to use shovels and wheelbarrows, to take up make work public sector jobs, to convey property deals, and to issue mortgages. All of their time and skills are wasted and without purpose. Banks and investors have made huge financial losses on their property investments. Young people have similarly made huge losses on their investments in their own skills and qualifications for jobs they will never work in again. At least some people can and will retrain, but an immense amount of time they can never recover has been wasted - and some will never be able to adjust. Long term unemployment a growing problem.

As for technology, its never been a huge driver of Irish economic growth. The Irish state has always had a vaguely nationalist socialist hostilty towards the concept of private Irish wealth as being somehow British and non-Irish. As far as Official Ireland is concerned, Ryanair is an enemy to be defeated, not a success to be celebrated.

Instead, the gameplan has always been a South Pacific cargo cult attitude towards foreign enterprise whilst protecting the existing insider classes of official Ireland. The result has been that theres very little history of technological innovation in Ireland and there is no threat of any Irish silicon valley driving growth in the Irish economy.

The one source of stimulus in the Irish economy is the government deficit, which the government is committed to eliminating. As slowly as possible - so for at least the next couple of years people are going to fear the future...more cuts, more tax hikes. When people fear the future, they dont spend...so no consumer driven boom.

The question then arises - where is the Irish growth miracle predicted by the Troika gameplan going to come from? Not from capital, not from labour, not from technology, not from a consumer boom. Ireland has already caught up with the developed world - diminishing returns applies...we have to earn our growth from here on in. And we have done nothing over the past 10 years to earn any growth at all....

We have spent and spent over the past 10 years. Now the elastic band of reality snaps back into place, so we pay and we pay and we pay. Thats the reality.

Farmer Pudsey

The outlook is bleak we have only three indignous industries, agriculture only starting to recover after years of neglect, tourism in the doldrums and fishing wiped out by neglect over the last forty years.

Our exports look good because multinational's are booking profits to avail of our low coporation Tax. The government is still only looking at high tech jobs and while we are progressin in this area to get a reduction in unemployment numbers we need to get more blue collor work. All government have failed to seed this most of our unemployed are previous construction, legal, or office based workers.

The loss of low tech work like Dell in Limerick was a disaster we need to start getting this type of high labour input work back

ongarite

Farmer Pudsey wrote: »

The loss of low tech work like Dell in Limerick was a disaster we need to start getting this type of high labour input work back

:rolleyes:
Dell and all PC manufacturers now outsource this to China or cheap Asian countries. Even what used to be high-end server manufacturing in IBM is gone from Ireland due to cost reasons.

Low tech assembly work is gone from Ireland and nearly all western nations. Its never coming back unless you like being paid a fraction of the current average industrial wage and working 60 hours week.

rumour

Good realistic post....thanks

I'd add to this and you may correct me. As long as we are propping up our banks at the behest of I don't know who, we will never write down the value of property. This is perhaps the single biggest curse.
Without this the banks will never be fully functional. As far as I can see the intention is to persevere and see out the mortgage madness of recent years to the full term. If this is the policy there will either be no market in property or a distorted one at best that serves only the banks balance sheets.
There is no plan out of this which means our banking problems are being kicked down the road for at least 20-25yrs. Add this to the new development in our promissory notes over the weekend, to kick them down the road also, it appears a consistent message. We'll pay sometime in never never land but lets keep borrowing and also we must never let anyone have visibility of the true state of Irish banking.

We'll pay our debts sometime down the road but please continue to lend to us, don't worry we'll tax the hell out of our citizens because we're a low tax base country and we need to spend on our public services. We've had three years of terrible austerity where the public sector pay bill keeps rising and our minister of transport gets paid more than David Cameron...please lend to us. Who will lend into this environment?

Add this to your assessment the only way is down down down until such time as the banks get repaid for their crazy lending, then slowly maybe they can expand their capital base. This is definitely not a 5yr problem or even a 10yr problem.

djpbarry

Sand wrote: »

If anything, Ireland is now under threat from lower cost, EU locations.

I think it’s a bit pointless for Ireland to be viewing other EU nations as competition. The real competition lies much further east than Poland.

Sand wrote: »

For example - I've worked in Poland and with Polish people in Ireland and found three things to be true:

- The Polish have a highly educated workforce
- The Polish have a hard working workforce
- The Polish have an English speaking workforce

Yeah, thats Irelands three famed advantages dead to rights.

Those three “advantages” could be applied to just about any country in the world. But anyway, Poland’s economy is totally different to Ireland’s – with the exception of food products (which pretty much every country in Europe produces in some form) they don’t have a whole lot in common. Poland is a highly industrialised economy specialising in heavy industry. Ireland, on the other hand, has developed a certain level of critical mass in high-tech manufacturing of integrated circuits and pharmaceutical products, for example – it’s very unlikely that Intel (for example) are going to up and move sticks to Poland.

Sand wrote: »

Young people have similarly made huge losses on their investments in their own skills and qualifications for jobs they will never work in again. At least some people can and will retrain, but an immense amount of time they can never recover has been wasted - and some will never be able to adjust. Long term unemployment a growing problem.

This is Ireland’s biggest problem going forward, without question – it’s difficult to see how the large numbers of unemployed construction workers are going to accept that the jobs they have lost are not coming back. They have two choices – migrate to where the work is or retrain. I don’t see either option being taken up to any great extent.

Sand wrote: »

As for technology, its never been a huge driver of Irish economic growth.

The same could probably have been said of Japan and Korea prior to the 1960’s.

Sand wrote: »

Instead, the gameplan has always been a South Pacific cargo cult attitude towards foreign enterprise whilst protecting the existing insider classes of official Ireland. The result has been that theres very little history of technological innovation...

That really depends on how you define “very little”. For example, I don’t believe it’s widely known that the first researchers to successfully split an atom were John Cockroft and Ernest Walton, an Irishman, for which they shared a Nobel Prize. The nickel-zinc battery was first developed in Ireland, as was radiotherapy, seismology, the induction coil, modern chemistry ... I could go on.

Ireland does have a history of scientific and technological achievement – the problem is, most people don’t know about it.

djpbarry

rumour wrote: »

We've had three years of terrible austerity...

Eh, no. No you haven't.

RichardAnd

djpbarry wrote: »

Eh, no. No you haven't.

That view depends entirely on your situation. Just because you may not have felt the pinch badly does not mean everyone else has had the same experience.

djpbarry

RichardAnd wrote: »

That view depends entirely on your situation.

I'm not basing it on any one individual's situation – I don’t live in Ireland anymore, so I’m certainly not basing it on my situation. My point is that there is still an awful of reigning in of government expenditure to be done in Ireland – “austerity” really hasn’t got going yet at all.

maninasia

I think it’s a bit pointless for Ireland to be viewing other EU nations as competition. The real competition lies much further east than Poland.

Actually, it doesn't. The industries that were going to move to Asia have moved to Asia 10 or 20 years ago. The low cost assembly and manufacturing jobs. However you must remember that due to EU importation rules and taxation system that many Asian companies still assemble products in the EU, mainly in places like Czech Republic, Romania, Poland etc.

It's time for people to wake up and realise the huge growth opportunities that the rise of Asia represents. The increase in milk and dairy and beef demand being one very obvious example. It goes beyond that to education provision, tourism, consulting services, luxury goods, online services and more. One of the biggest foreign investments under consideration in Ireland now is an exhibition centre for Chinese companies in Athlone. If Athlone get this it's going to be a MAJOR boon to that area. Restaurants, hotels, shops, car rental, logistics, designers, tradesmen. They will all be be used or needed. So let's not be scared by the rise of Asia but see it is as a positive.


As for Poland being in competition with Ireland, I don't think Poland is so attractive in terms of service provision than Ireland for a number of reasons. Ireland being English speaking makes it much easier for foreigners to move and live here. Dublin specifically is a lot more multicultural than anywhere in Poland. Ireland has a large pool of existing very experienced workers and managers to fill vacancies. Maybe manufacturing wise Ireland would be at a disadvantage but services wise I highly doubt it. In terms of IT and pharma specifically Ireland has a strong core that is not going to spring up overnight somewhere else. We can still see companies like Wyeth that have been in Ireland for 40-50 years expanding their footprint.