| Irish economy faces into a bleak 2009 and further contraction in 2010 - Davy By Finfacts Team Dec 4, 2008 - 8:22:15 AM | Email this article Printer friendly page |
The Irish economy faces into a bleak 2009. Output is set to fall by the most on record. Consumers will save a greater share of their income and shun spending, and the unemployment rate is likely to breach 10% by the end of the year. Davy Research predicts that the Irish economy will shrink again in 2010 (albeit only slightly) following a sharp dip in 2008 and 2009. It projects real GNP to slip 0.5% in 2010. That compounds the likely 6%+ drop in real national income cumulatively in 2008 and 2009.
Davy Chief Economist Rossa White says in its latest report on the economy: "To cross-check, we looked at similar instances of economies faced with the bursting of a property bubble and a corresponding banking crisis. It has been rare for an economy to suffer only two years of declining incomes; at least three has been the norm.
That was the case in the experience of Finland and Sweden (the latter is a better example in the Irish context because it did not endure a currency crisis: membership of the euro insulates Ireland from such an event)."
Rossa White summarises the Davy outlook on the Irish economy:
GNP to shrink marginally in 2010 after sharp drop in 2009
- We expect real GNP to shrink for a third straight year in 2010, albeit marginally. We forecast a decline of 0.5% in 2010, whereas the economy will contract by 4.1% in 2009 and 2% in 2008.
- The economy may end up more than 7% smaller in cash terms in 2010 than it was in 2007.
- Consumer spending and building investment will fall further in 2010, albeit not as markedly as in 2009.
- Exports are an important variable. As global reflationary efforts finally succeed, a moderate rebound in export growth may prevent another sharp contraction in the Irish economy in 2010.
Unemployment rate will hit 10% by the fourth quarter of 2009 and may peak below 12% by the final quarter of 2010
- The rapid deterioration in the labour market will continue throughout 2009. It is a lagging variable, so unemployment will keep rising in 2010 even if economic activity has reached a floor. We project that the unemployment rate will reach 10% by Q4 2009 and may peak at almost 12% at the end of 2010.
- The economy will get a fiscal stimulus in 2009, despite suggestions in some quarters. The cyclically adjusted budget deficit will widen significantly due to lower-than-expected tax revenue.
Adequately capitalised banking system is a necessary condition for economic recovery
High private debt levels are a burden for the economy. Adequate recapitalisation of the banking system is necessary to liberate new credit provision and will ultimately hasten recovery in the Irish economy
source: irish finance news
link to the original post:
http://www.finfacts.ie/irishfinancenews/article_1015445.shtml
Fort Lauderdale Blog and Real Estate News
Rory Vanucchi
RoryVanucchi@gmail.com
http://waterfrontlife.blogspot.com
www.FortLauderdaleLiving.net
Posts
