Good economic news thread

Godge

http://www.rte.ie/news/business/2014/1003/649731-central-bank/

And the good news keeps on rolling.

"The Central Bank has nearly doubled its prediction for economic growth this year, largely due to a higher than expected level of exports."

Rightwing

How can they get this is so badly wrong. Double their growth forecasts in 3 months ?

andrew

Rightwing wrote: »

How can they get this is so badly wrong. Double their growth forecasts in 3 months ?

Unexpectedly good export figures for the first half of the year. Usually, Export growth will track demand growth in the countries to whom we export. This time, export growth exceeded demand in these countries, which wouldn't have been anticipated. It'll probably revert to the mean in the next quarter.

Rightwing

andrew wrote: »

Unexpectedly good export figures for the first half of the year. Usually, Export growth will track demand growth in the countries to whom we export. This time, export growth exceeded demand in these countries, which wouldn't have been anticipated. It'll probably revert to the mean in the next quarter.

I think you are being overly kind to them Andrew. That's a massive miss.

andrew

Rightwing wrote: »

I think you are being overly kind to them Andrew. That's a massive miss.

I appreciate how incredibly difficult it is to forecast this kind of thing. I'd never expect a forecast to be anything other than a very general "this is the range of figures we're expecting" estimate. Maybe I just have lower expectations. In any case, as far as 'misses' go it's the largest upward revision the CBI has had, so it's not like it's a very regular thing to miss by that amount.

Rightwing

andrew wrote: »

I appreciate how incredibly difficult it is to forecast this kind of thing. I'd never expect a forecast to be anything other than a very general "this is the range of figures we're expecting" estimate. Maybe I just have lower expectations. In any case, as far as 'misses' go it's the largest upward revision the CBI has had, so it's not like it's a very regular thing to miss by that amount.

True enough, a bit like weather forecasting, not a whole lot of accuracy involved.

It's not just the Irish though, e.g.. I see the same in the US. Their forecasts for NFP & GDP can be shockingly wide off the mark.

andrew

Rightwing wrote: »

True enough, a bit like weather forecasting, not a whole lot of accuracy involved.

It's not just the Irish though, e.g.. I see the same in the US. Their forecasts for NFP & GDP can be shockingly wide off the mark.

Yeah, economic forecasting is very hit and miss. Mostly miss. Here's a really good FT article about why this can be case. Hopefully it's not behind a paywall.

Slozer

Can somebody tell me if illegal economic activity is being added to GDP under the new EU guidelines?

If so how much of a percentage is being added?

For instance, the huge drug haul off the coast within the past 2 weeks. Is this added to the GDP? if so, how much?

andrew

Slozer wrote: »

Can somebody tell me if illegal economic activity is being added to GDP under the new EU guidelines?

If so how much of a percentage is being added?

For instance, the huge drug haul off the coast within the past 2 weeks. Is this added to the GDP? if so, how much?

Black market activity is included due to the implementation of ESA 10. But previous GDP figures have been adjusted to take this into account, and so the forecast growth on previous year isn't because the black market is only now being taken into account.

The drug haul wouldn't be included because they weren't sold or consumed. Otherwise, they'd show up as individual consumption (and probably a bunch of other places too).

Godge

Rightwing wrote: »

How can they get this is so badly wrong. Double their growth forecasts in 3 months ?

i don't know. Maybe you can tell us.

http://www.boards.ie/vbulletin/showpost.php?p=92421747&postcount=22

Can you define the not too distant future? Then maybe we can tell how much better at predicting you are.

Rightwing

Godge wrote: »

i don't know. Maybe you can tell us.

http://www.boards.ie/vbulletin/showpost.php?p=92421747&postcount=22

Can you define the not too distant future? Then maybe we can tell how much better at predicting you are.

I told you on that thread, well within the next decade.

SupaNova2

Given that debt to gdp is often used as an indicator of sustainable debt, why add something to gdp calculation that will lower debt to gdp levels and give the false appearance of more sustainability? If drugs, prostitution etc. were legalised and taxed it would make more sense. I guess knowing the size of black market transactions can't hurt though, or maybe it can as government can see what tax is left on the table.

Godge

http://www.rte.ie/news/business/2014/1007/650522-ibec-forecast/

"Employers group Ibec has upgraded its growth outlook for the year to 6.1% in GDP terms on the back of what it called "remarkably positive trends right across the economy".


If that is true, then it will do wonders for the debt/GDP ratio and the budget deficit.

AlmightyCushion

Godge wrote: »

http://www.rte.ie/news/business/2014/1007/650522-ibec-forecast/

"Employers group Ibec has upgraded its growth outlook for the year to 6.1% in GDP terms on the back of what it called "remarkably positive trends right across the economy".


If that is true, then it will do wonders for the debt/GDP ratio and the budget deficit.

Ibec have been trying to get the government to cut taxes so it could be the case that they are putting out positive figures before the budget to put pressure on the government to reduce taxes.

Phoebas

AlmightyCushion wrote: »

Ibec have been trying to get the government to cut taxes so it could be the case that they are putting out positive figures before the budget to put pressure on the government to reduce taxes.

Could be, but the Department of Finance are mirroring the view that it is a broad recovery, fuelled mainly by domestic demand. That's really good news.
They are predicting 4.7% growth, which is still pretty impressive.

http://www.irishtimes.com/business/economy/ireland-s-recovery-now-being-driven-by-domestic-demand-1.1955194

NIMAN

Can someone answer me this one?

I heard a guy from the ERSI on the radio the other day, saying he expects to see 5% growth this year and next for us. Fair enough, exports are booming apparently.

Well this morning on the Business News on Rising Time on RTE radio I listened to how the US, German, Japanese, Chinese and Brazilian economies are all showing poor enough data, and that they are downgrading some of their growth forecasts etc.

So if the worlds biggest economies are downgrading, how come a tiny country like us are claiming we are going to be booming the next couple of years. We need people to be buying what we're selling.

Could these 5% figures be about to go belly up over the next year or so?

Rightwing

NIMAN wrote: »

Can someone answer me this one?

I heard a guy from the ERSI on the radio the other day, saying he expects to see 5% growth this year and next for us. Fair enough, exports are booming apparently.

Well this morning on the Business News on Rising Time on RTE radio I listened to how the US, German, Japanese, Chinese and Brazilian economies are all showing poor enough data, and that they are downgrading some of their growth forecasts etc.

So if the worlds biggest economies are downgrading, how come a tiny country like us are claiming we are going to be booming the next couple of years. We need people to be buying what we're selling.

Could these 5% figures be about to go belly up over the next year or so? [/ QUOTE]

Of course they could. These punters (and that's all they are) are basically guessing.

Get Real

Rightwing wrote: »

NIMAN wrote: »

Can someone answer me this one?

I heard a guy from the ERSI on the radio the other day, saying he expects to see 5% growth this year and next for us. Fair enough, exports are booming apparently.

Well this morning on the Business News on Rising Time on RTE radio I listened to how the US, German, Japanese, Chinese and Brazilian economies are all showing poor enough data, and that they are downgrading some of their growth forecasts etc.

So if the worlds biggest economies are downgrading, how come a tiny country like us are claiming we are going to be booming the next couple of years. We need people to be buying what we're selling.

Could these 5% figures be about to go belly up over the next year or so? [/ QUOTE]

Of course they could. These punters (and that's all they are) are basically guessing.

What I don't get is that the current government criticized the previous one because they ignored warnings and cut taxes/increased spending at an unsustainable rate. They then excused this saying they've found a new way to run the economy.

While the current news is good news, the government are doing the exact same. We still have huge amounts of debt, and at the first sign of things looking good, its ideas being floated about:

Tax cuts

Reversal of public sector pay cuts

A phased reintroduction of the social welfare Christmas bonus

That we've "cracked" the boom bust cycle (a natural cycle in economics)

That Ireland will grow positively for the next ten years.


Now, if I get a bit more money in the next budget, I won't complain. But thats the problem, nobody will, then in 5 or ten years we'll be out protesting again should another recession arise. I say, keep it as is for now, see how it goes for another year or two, if they really cared and it wasn't just about votes.

Godge

Get Real wrote: »

What I don't get is that the current government criticized the previous one because they ignored warnings and cut taxes/increased spending at an unsustainable rate. They then excused this saying they've found a new way to run the economy.

While the current news is good news, the government are doing the exact same. We still have huge amounts of debt, and at the first sign of things looking good, its ideas being floated about:

Tax cuts

Reversal of public sector pay cuts

A phased reintroduction of the social welfare Christmas bonus

That we've "cracked" the boom bust cycle (a natural cycle in economics)

That Ireland will grow positively for the next ten years.


Now, if I get a bit more money in the next budget, I won't complain. But thats the problem, nobody will, then in 5 or ten years we'll be out protesting again should another recession arise. I say, keep it as is for now, see how it goes for another year or two, if they really cared and it wasn't just about votes.

It looks like the government will be able to do some or all of the above and still finish well within the Troika targets.

Godge

Rightwing wrote: »

Of course they could. These punters (and that's all they are) are basically guessing.

The ESRI, IBEC, Central Bank and the Department of Finance are all punters?

Rightwing

Godge wrote: »

The ESRI, IBEC, Central Bank and the Department of Finance are all punters?

They are forecasting and we'll be kind to them, they are not very good at it.

chopper6

Get Real wrote: »

A phased reintroduction of the social welfare Christmas bonus

Why...so they can spend the extra money on drink?

murphaph

Godge wrote: »

It looks like the government will be able to do some or all of the above and still finish well within the Troika targets.

Why not keep taxes as they are and build some badly needed infrastructure rather than blowing it buying an election?

murphaph

Godge wrote: »

The ESRI, IBEC, Central Bank and the Department of Finance are all punters?

In fairness they've all made spectacular mistakes in recent years.

Sand

NIMAN wrote: »

Can someone answer me this one?

I heard a guy from the ERSI on the radio the other day, saying he expects to see 5% growth this year and next for us. Fair enough, exports are booming apparently.

Well this morning on the Business News on Rising Time on RTE radio I listened to how the US, German, Japanese, Chinese and Brazilian economies are all showing poor enough data, and that they are downgrading some of their growth forecasts etc.

So if the worlds biggest economies are downgrading, how come a tiny country like us are claiming we are going to be booming the next couple of years. We need people to be buying what we're selling.

Could these 5% figures be about to go belly up over the next year or so?

"Exports" in the Irish sense are an accounting trick, highly dependant on tax avoidance strategies by multi nationals. They book profits made abroad against the Irish taxation system, boosting "exports" in a false and misleading way.

Hence Irish exports can climb by 5% when the global economy is slowing. Where the bull**** goes off the charts is where Irish politicians loudly claim this is anything substantial or solid that can underpin actual economic and fiscal planning for years ahead. It is a windfall, we're taking a slice of other peoples money that otherwise has very little to do with the Irish economy. Here today, gone tomorrow. Next year the multi nationals could decide to reinvest or book their revenue against another jurisdiction offering a tax avoidance benefit. With the imminent demise of the double Irish, exports could take a significant decline - the ultimate aim of other states is to ensure that the revenue generated in their territory is taxed in their territory which is bad for Ireland as we are a tiny market.

The sheer size of the multinational sector compared to the rest of the Irish economy means overall Irish economic figures (such as labour productivity, exports, GDP, etc.) are all significantly impacted by these windfalls in a way that larger economies are not. It is, and has been, damaging to overall economic and fiscal policy because our political classes want to believe they are genius's and so don't bother actually developing or supporting a coherent economic policy.

ardmacha

Sand wrote: »

"Exports" in the Irish sense are an accounting trick, highly dependant on tax avoidance strategies by multi nationals. They book profits made abroad against the Irish taxation system, boosting "exports" in a false and misleading way.

Hence Irish exports can climb by 5% when the global economy is slowing. Where the bull**** goes off the charts is where Irish politicians loudly claim this is anything substantial or solid that can underpin actual economic and fiscal planning for years ahead. It is a windfall, we're taking a slice of other peoples money that otherwise has very little to do with the Irish economy. Here today, gone tomorrow. Next year the multi nationals could decide to reinvest or book their revenue against another jurisdiction offering a tax avoidance benefit. With the imminent demise of the double Irish, exports could take a significant decline - the ultimate aim of other states is to ensure that the revenue generated in their territory is taxed in their territory which is bad for Ireland as we are a tiny market.

The sheer size of the multinational sector compared to the rest of the Irish economy means overall Irish economic figures (such as labour productivity, exports, GDP, etc.) are all significantly impacted by these windfalls in a way that larger economies are not. It is, and has been, damaging to overall economic and fiscal policy because our political classes want to believe they are genius's and so don't bother actually developing or supporting a coherent economic policy.

This is fair comment. However many real Irish businesses are also doing better with the Euro at 77p sterling having been 97p in 2009 and with negligible inflation in Ireland in that period.

Godge

Sand wrote: »

"Exports" in the Irish sense are an accounting trick, highly dependant on tax avoidance strategies by multi nationals. They book profits made abroad against the Irish taxation system, boosting "exports" in a false and misleading way.

Hence Irish exports can climb by 5% when the global economy is slowing. Where the bull**** goes off the charts is where Irish politicians loudly claim this is anything substantial or solid that can underpin actual economic and fiscal planning for years ahead. It is a windfall, we're taking a slice of other peoples money that otherwise has very little to do with the Irish economy. Here today, gone tomorrow. Next year the multi nationals could decide to reinvest or book their revenue against another jurisdiction offering a tax avoidance benefit. With the imminent demise of the double Irish, exports could take a significant decline - the ultimate aim of other states is to ensure that the revenue generated in their territory is taxed in their territory which is bad for Ireland as we are a tiny market.

The sheer size of the multinational sector compared to the rest of the Irish economy means overall Irish economic figures (such as labour productivity, exports, GDP, etc.) are all significantly impacted by these windfalls in a way that larger economies are not. It is, and has been, damaging to overall economic and fiscal policy because our political classes want to believe they are genius's and so don't bother actually developing or supporting a coherent economic policy.

That can all be taken into account when looking at the statistics.

We have seen employment growth, we have seen wages rises in the private sector, we have seen a fall in social welfare recipients, we have seen a rise in income tax revenues. Because of all of that, we don't need GDP figures to tell us the economy is doing well.

Sand

ardmacha wrote: »

This is fair comment. However many real Irish businesses are also doing better with the Euro at 77p sterling having been 97p in 2009 and with negligible inflation in Ireland in that period.

Oh I agree, my point is that the movements of the MNCs can overwhelm the performance of the "domestic" exporters. The "domestic" exporters can be having a good year, yet overall "exports" can take a huge hit due to the MNCs taking a different tax avoidance strategy. And the reverse is also true.

All economies face this to some degree, Ireland is fairly unique in that it has a huge MNC sector attached to an otherwise tiny economy so the effect is much more pronounced. This makes economic/fiscal planning difficult because there is a definite psychological bias towards "good news". There isn't much interest in exploring stats which inexplicably point to Irish workers being some sort of miracle workers in labour productivity. If someone questions it, they'll find life difficult at the Civil Service where they are only interested in good news.

@Godge

That can all be taken into account when looking at the statistics.

We have seen employment growth, we have seen wages rises in the private sector, we have seen a fall in social welfare recipients, we have seen a rise in income tax revenues. Because of all of that, we don't need GDP figures to tell us the economy is doing well.

Can be taken into account, but usually isn't due to political and insider interest pressures. For example, is there really a property supply shortage in Dublin? A few years after a property bubble which collapsed due to an oversupply of property which still haven't been shifted? Or is that NAMA has (quite predictably) put the property market into cold storage? There is the right answer, and then there is the answer the property industry and their political backers want.

We have seen some improvement in unemployment, which is good and encouraging (though wasn't there something about them reclassifying the unemployed?), a fall in social welfare payments (Jobbridge? Emigration?) and a rise in income tax revenue.

I'd describe this as doing better in nominal terms than recent years (which were awful in all terms), and I wouldn't herald the dawn of a new Golden Age as the government is trying to do.

This could just be a gradual return to mean, assisted by the ECB handing out unprecedented amounts of liquidity to fight deflation. Despite that, Irelands debt profile is grim, and the global economy isn't looking too healthy. Germany in particular is certainly not doing all that well - perhaps its short-sighted and stupid policies to cripple its economic trading partners might be re-evaluated when its in their interests. That might be to Ireland's benefit.

Sheldons Brain

Perhaps the atmosphere in which the "double Irish" and similar schemes are being eliminated, or at least reduced, will also have a beneficial effect on Irish statistics.

Kermit.de.frog

Good news eh?