Recession predictions

Deub

[Deleted User] wrote: »

I just cant see the major recession in ireland. The pharma sector here cant spend fast enough and that leads to huge secondary jobs. Intel are going ahead with their plant, construction of huge developments resuming. From what I can see there is still a huge shortage in skilled positions. There should be a program set up now for people in typical unskilled jobs to reskill as they will be hit hardest by this recession which will be retail and hospitality. Also if the irish will be competative in tourism there will be a huge domestic market this year.
We will feel the effects of 3 months of little economic activity but from what I am seeing the country will bounce back strong.

Every country is expecting a big recession but Ireland won’t be impacted?
I don’t see how it would be possible.

greenfield21

Deub wrote: »

Every country is expecting a big recession but Ireland won’t be impacted?
I don’t see how it would be possible.

Simply, our economy is built on fdi- these companies are the most profitable in the world who are coming here to avoid paying tax- will they lay people of or cut wages?? I doubt it as they are awash with cash. Look at other countries who have manufacturing tourism etc they are going to be hit much harder.

Deub

greenfield21 wrote: »

Simply, our economy is built on fdi- these companies are the most profitable in the world who are coming here to avoid paying tax- will they lay people of or cut wages?? I doubt it as they are awash with cash. Look at other countries who have manufacturing tourism etc they are going to be hit much harder.

Don’t you they will reduce their investments while the economy recover that some companies will go into bankruptcy?

For information, tourism is one of the biggest sector for the economy in Ireland.
Fdi employed 245k people in 2019, tourism: 265k people.
It looks like the economy is not only built around fdi.

theguzman

Deub wrote: »

Don’t you they will reduce their investments while the economy recover that some companies will go into bankruptcy?

For information, tourism is one of the biggest sector for the economy in Ireland.
Fdi employed 245k people in 2019, tourism: 265k people.
It looks like the economy is not only built around fdi.

Tourism only employs migrant workers and majority minimum wage salaries, a Facebook data analyst on €8k per month is the equivalent to 8 Eastern European/Brazilian hotel maids etc on minimum or less money. Tourism is not hugely important to the overall grand scheme of things any-more except in impoverished scenic regions like Kerry and Donegal etc.

Deub

theguzman wrote: »

Tourism only employs migrant workers and majority minimum wage salaries, a Facebook data analyst on €8k per month is the equivalent to 8 Eastern European/Brazilian hotel maids etc on minimum or less money. Tourism is not hugely important to the overall grand scheme of things any-more except in impoverished scenic regions like Kerry and Donegal etc.

Not all Fdi employees are paid 8k per month but I agree the wage of the tourism industry is lower but less people Employed in tourism means less tourist spending money here.
Tourism represents 9.3 billions to the economy which is not small change.

4068ac1elhodqr

Tourism is a easy win-win, folks arrive from afar, spend money and leave with much, much less cash than they came with.
Dave the data-analyst might only squirm away wages into tax efficent offshore investments, or bang the whole lot into property.

TUI had a 'slight' stock bounce back after Spain said the beaches would reopen, a one day share price gain of +52% recently.
The only risk to these sorts of gains is a wave2 come November (mixed with Norovirus, Inf A/B etc)

greenfield21

Deub wrote: »

Don’t you they will reduce their investments while the economy recover that some companies will go into bankruptcy?

For information, tourism is one of the biggest sector for the economy in Ireland.
Fdi employed 245k people in 2019, tourism: 265k people.
It looks like the economy is not only built around fdi.

May corporate tax receipts 1.25b higher than may 2019 even though the economy was basically shut down. Recovery Looks good.

Deub

greenfield21 wrote: »

May corporate tax receipts 1.25b higher than may 2019 even though the economy was basically shut down. Recovery Looks good.

Interesting numbers! something to monitor in the coming months.
Can you share the link where you found this?

Zenify

greenfield21 wrote: »

May corporate tax receipts 1.25b higher than may 2019 even though the economy was basically shut down. Recovery Looks good.

Was that tax that was due for period before Covid?

What Username Guidelines

Deub wrote: »

Interesting numbers! something to monitor in the coming months.
Can you share the link where you found this?

https://www.rte.ie/news/2020/0603/1145219-exchequer-returns-reveal-6-1bn-deficit-in-may/

An unexpected increase in the amount of corporation tax collected offset sharp declines across all other tax heads.

Spending was up ahead of where it was planned to be by 19% or €4.175bn.

The rise in expenditure reflects increased spending in response to the Covid-19 pandemic, particularly in relation to the Department of Health and the Department of Employment Affairs and Social Protection.

Corporation tax came in €1.224bn ahead of last year.

...

For the month of May, corporation tax receipts amounted to €2.5bn.

Zenify wrote: »

Was that tax that was due for period before Covid?

Yep

Mr Donohoe said this was over €1.2bn more than May of last year, but added that this increase mostly related to economic activity that occurred in 2019.

CBear1993

Interesting thread. Working in the construction industry as a small subcontractor - own it with my father. I have a very negative outlook for the rest of the year unfortunately, despite always being a positive person.

Really finding it hard to see if we’ll make it to the end of the year- a lot of construction projects that were to go ahead pre Covid have all been shelved and clients are holding their money back now. Only construction projects that are going at the moment are ones that are already on site pre Covid.

wassie

greenfield21 wrote: »

May corporate tax receipts 1.25b higher than may 2019 even though the economy was basically shut down. Recovery Looks good.

I'm all for having a positive outlook, but how does exactly the recovery look good? Govt may have more money than expected, but with unemployment at 26% (adjusted) down from 28%, its not going to go far.

ESRI forecasting that even in the best case scenario, the Irish economy is set to experience the largest annual decline in its history. Thats a long road ahead I would think.

Deub

wassie wrote: »

I'm all for having a positive outlook, but how does exactly the recovery look good? Govt may have more money than expected, but with unemployment at 26% (adjusted) down from 28%, its not going to go far.

ESRI forecasting that even in the best case scenario, the Irish economy is set to experience the largest annual decline in its history. Thats a long road ahead I would think.

Without forgetting what the Minister of Finance said in February:

"one thing we can be certain of is that the current high levels of corporation tax cannot be relied on in the long term.”
https://www.irishtimes.com/business/economy/corporate-tax-take-cannot-be-relied-upon-in-future-warns-donohoe-1.4189282

nthclare

theguzman wrote: »

Tourism only employs migrant workers and majority minimum wage salaries, a Facebook data analyst on €8k per month is the equivalent to 8 Eastern European/Brazilian hotel maids etc on minimum or less money. Tourism is not hugely important to the overall grand scheme of things any-more except in impoverished scenic regions like Kerry and Donegal etc.

What do you know about tourism ?
I'm working in tourism since 1996 and you're well off the mark suggesting that tourism doesn't pay well.

Impoverished regions like Donegal and Kerry.
I'm telling you one thing people in Kerry and Donegal have a way better quality of life than people packed into buildings like sardines all day, and emulating human cogs running the show for some narcissist ****ting down on everyone.

Comparing a Facebook data analyst to a few European/Brazilian maid's as you so eloquently suggest, then quantifying the costs of both and how it's going to give people the impression you're Johnny Cool...

I left the cooperative world and was a statistical analysis and data reconfiguration techie...

And it was the most soulless and mind numbing boring job ever, the people who were my colleagues were absolute dicks.
Pure jocks, most of them got caught out in the boom making stupid decisions and always hungover from banger or booze from Monday until Wednesday...

What a horific existence.

I'd much prefer to get paid less than be a miserable goon looking at a screen all day.

The tourism industry is very important,we have a lot to offer visitors and the domestic market is important too.
Oh I worked in fluff jobs and observed all the knobs bigging eachother up and trying to look down on others..

I suppose your idea of a Sunday is being hungover from the night before and trapsing around shopping centers looking for a Ralph Lauren Polo shirt.

Typical of the current yawwws looking down on people who earn an honest days work.

And by the way Facebook ain't going to last forever either

Doctors room ghost

The sale for point of lay pullets will sky rocket again with people going self sufficient.
The dog pounds and charities will be packed full of abandoned dogs aswell.
They’re my predictions

Gloomtastic!

Doctors room ghost wrote: »

The sale for point of lay pullets will sky rocket again with people going self sufficient.
The dog pounds and charities will be packed full of abandoned dogs aswell.
They’re my predictions

They both happened a few months ago.

Snow Garden

Deleted User wrote: »

I just cant see the major recession in ireland. The pharma sector here cant spend fast enough and that leads to huge secondary jobs. Intel are going ahead with their plant, construction of huge developments resuming. From what I can see there is still a huge shortage in skilled positions. There should be a program set up now for people in typical unskilled jobs to reskill as they will be hit hardest by this recession which will be retail and hospitality. Also if the irish will be competative in tourism there will be a huge domestic market this year.
We will feel the effects of 3 months of little economic activity but from what I am seeing the country will bounce back strong.

The sectors we will need to grow the economy again are Pharma/Tourism/IT/Agrifood. Let's look at each one.

Tourism: 11m tourists in 2019. Even stay-at-home tourism wont make up for half of that 2019 spend because consumer confidence is falling fast and many people on welfare.

Pharma/MedTech: Some companies are doing superb (eg. Covidien/Medtronic who make ventilators) but some are seeing a significant fall in demand (Boston/TE Connectivity). Boston stalled a planned expansion soon after Covid struck. TE/Creganna have gone to a 4 day week.

IT: Again some companies are doing well (Cisco/Avaya) but other companies are laying off IT staff at a rate of knots (e.g. Uber / AirBnB / Ryanair/ PaddyPower/ HPE). Almost Every IT company is reporting the risk of reduced enterprise customer spend. Customers are only investing time/money in ensuring their BAU systems are operational. Investment spend has stalled. The Q2 results in July will tell an awful lot.

Agrifood: Beef prices falling. Ireland/EU Restaurants not open and they are the key market for prime cuts of beef. People tend to eat steak in restaurants and mince at home...Beef exports to China stalled. Meat plants full of Covid. Kerrygold etc is seen as a niche product in Europe, demand will likely drop.

I dont see many upsides and it's only June.

Fred Cryton

Ireland is lucky as our 3 major value added industries - pharma, tech and finance are either doing ok (finance), doing pretty well (tech) or doing brilliantly (pharma) through this crisis.

It's important to understand that every other job in the economy is a function of these 3 sectors...These 3 sectors are what produce our standard of living.

Hospitality, tourism and retail are job rich but they're not wealth generating sectors - they are sectors through which the economy spends the wealth it has already generated in those 3 sectors.

So i would predict Irelands recovery to be faster that other countries - provided we make work pay by getting rid of the absurd 350 welfare payment.

kravmaga

Deub wrote: »

Every country is expecting a big recession but Ireland won’t be impacted?
I don’t see how it would be possible.

https://www.cso.ie/en/statistics/labourmarket/monthlyunemployment/

Take a look at the stats, not exactly healthy now

Gloomtastic!

Fred Cryton wrote: »

So i would predict Irelands recovery to be faster that other countries - provided we make work pay by getting rid of the absurd 350 welfare payment.

Very surprised to see the unemployment figure down just 2% from two weeks ago. The above may be the main reason.

Hairy Japanese BASTARDS!

• Increased unemployment.
• Another pension levy.
• CGT / Inheritance tax to go through the roof.
• Teachers will demand more money due to the restructuring of the exams (money which we won't have).
• Public transport cuts.
• More fuel levies.
• More motor tax levies.
• Cycling infrastructure will unfortunately suffer.

Poor_old_gill

When the f*ck are banks going to be forced/encouraged to drop interest rates?
People paying 3% interest on a mortgage or 6/7% on a personal loan now is just crazy - especially with the economy about to tank.

Drifter50

CBear1993 wrote: »

Interesting thread. Working in the construction industry as a small subcontractor - own it with my father. I have a very negative outlook for the rest of the year unfortunately, despite always being a positive person.

Really finding it hard to see if we’ll make it to the end of the year- a lot of construction projects that were to go ahead pre Covid have all been shelved and clients are holding their money back now. Only construction projects that are going at the moment are ones that are already on site pre Covid.

Yep, I`d agree with all that. Have a look at the "buying/selling a house in the current climate" thread here and the way the banks are holding back completing mortgages, pulling back on approvals etc etc is an indicator of things to come. I`m in the contracting game too and while I`ve had stuff to do in the last couple of months on emergency call outs, most of the project work I had lined up have gone on the back burner. As we allegedly come out of lockdown, it appears at the moment I`ll have less to do. Also people are holding back on paying creditors, maintenance contracts are being revisited and held back

Zenify

Poor_old_gill wrote: »

When the f*ck are banks going to be forced/encouraged to drop interest rates?
People paying 3% interest on a mortgage or 6/7% on a personal loan now is just crazy - especially with the economy about to tank.

A banks goal is to make profit, not to support the public during a downturn. We have higher mortgage rates because we dont repossess that many properties
from non performing loans. We also dont have very much competition in our banking sector, I've heard people mentioning that we dont allow competition in order to support our state owned banks.... not sure the truth to that though.

Poor_old_gill

Zenify wrote: »

A banks goal is to make profit, not to support the public during a downturn. We have higher mortgage rates because we dont repossess that many properties
from non performing loans. We also dont have very much competition in our banking sector, I've heard people mentioning that we dont allow competition in order to support our state owned banks.... not sure the truth to that though.

If our banks are (majority) state owned then they should be used like any other lever of the state to help lessen the impending recession.

Lowering interest rates will put more money into peoples hands and thus increase the flow of $$.
Also if rates stay as high as they are then it's very likely that the rate of default will increase as we get deeper into this downturn

A crisis like this takes proper leadership & vision - not just leaving things as they are and hoping for the best

Geuze

Poor_old_gill wrote: »

When the f*ck are banks going to be forced/encouraged to drop interest rates?
People paying 3% interest on a mortgage or 6/7% on a personal loan now is just crazy - especially with the economy about to tank.

Banks here must hold more capital against mortgages than in other countries.

So charging the same rate as elsewhere means less profit than elsewhere.

Charging more than elsewhere could even be less profitable than a mortgage abroad.

They have to hold more capital due to our bad debts and repossessions.

https://assets.gov.ie/6836/664f5174ebd34f7e938aea654bed6757.pdf

Poor_old_gill

Geuze wrote: »

Banks here must hold more capital against mortgages than in other countries.

So charging the same rate as elsewhere means less profit than elsewhere.

Charging more than elsewhere could even be less profitable than a mortgage abroad.

They have to hold more capital due to our bad debts and repossessions.

https://assets.gov.ie/6836/664f5174ebd34f7e938aea654bed6757.pdf

With rates at 3% - you will see default increase.
This is what I mean by showing vision & leadership - the ability to see that household incomes are going to fall and making changes ahead of time is necessary here.

Not waiting for additional & inevitable defaults at 3% then having to hike up rates for others and seeing the whole banking sector in crisis again.

The economy is a long term play but the long term will never be realised if we cripple people in the short term

Looking at the factors that determine the mortgage interest rate in the doc you attached:

The return that shareholders seek - we are the shareholders and our returns will be diminished with inevitable defaults at higher rates
Operating costs - are falling as banks lay off staff
The cost of risk - this will only increase with higher rates and thus will lead to the example I gave above.
Support growth in new lending - if unemployment is high, interest rates high & disposable income low then who will be borrowing?
An expected ROE of 9-10% with a realised ROE of twice that of Germany? This is not necessary at all

There's almost a smug approach taken by banks here that 'well as we cant repossess then we'll just make everyone pay and that'll learn them' but that's all well & good in an economy that is growing but ours is screwed in the short term.

wassie

Zenify wrote: »

A banks goal is to make profit, not to support the public during a downturn. We have higher mortgage rates because we dont repossess that many properties
from non performing loans. We also dont have very much competition in our banking sector, I've heard people mentioning that we dont allow competition in order to support our state owned banks.... not sure the truth to that though.

There is nothing stopping new entrants provided they meet all Central Bank requirements.

My take would be that the competition is not interested in coming because the difficulties associated with repossessing homes. As a result, we have higher mortgage rates because of a lack of competition.

All the while the banks feed us all these 'reasons' why rates are higher that are unique to Ireland.

Geuze

Both GDP and GNP grew in Q1, compared to 2019 Q4.

Although personal consumption did fall.

https://www.cso.ie/en/csolatestnews/presspages/2020/quarterlynationalaccountsandinternationalaccountsquarter12020provisional/

https://www.cso.ie/en/media/csoie/newsevents/presentations/Q1_2020_QNA_IA_Final.pdf

Geuze

Let's assume sharp falls in GDP in Q2, but a slight rise in Q3.

Is a recession defined as two consecutive quarters of falling GDP?

We might have one very sharp quarterly fall in Q2, then growth?

If all the decline is concentrated into Q2, but 2020 GDP still ends up lower than 2019, is that a recession?

I assume it is.