Any recovery in the Irish economy will be slower than in other countries and is unlikely to become evident before 2011, according to a report from Goodbody Stockbrokers.
In its latest economic forecast Goodbody’s says the Irish economy will contract by 8.7 per cent this year followed by a further 4.6 per cent drop next year. However, it expects growth of 1 per cent in 2011.
According to Goodbody economist Dermot O’Leary, the Irish economy that emerges from the recession will be very different to that which entered it and he expects exports to account for an increasing share of economic output.
Although he believes growth will resume in 2011 this is also the year in which unemployment is expected to peak at 17.5 per cent, and Mr O’Leary pointed to the consequence of this level of job losses in Finland.
“Worryingly, when employment fell by this extent in Finland in the early 1990s, it took 18 years for it to return to its pre-recession level,” he said.
Inflation is expected to fall by 4 per cent this year and Mr O’Leary said the process of engineering a real devaluation was underway with wages falling by between 7 and 8 per cent this year.
The Government’s prediction of a budget deficit of 3 per cent of GDP by 2013 remained dependent on more spending cuts and tax rises coupled with a return to growth.
The economist also expects a 4 per cent fall in consumer prices this year and said the extent of retrenchment by Irish consumers had been dramatic, noting that retail sales were down 22 per cent by volume in the first quarter.
On the public finances, his report said that while the April Budget ‘started the ball rolling’ in addressing the problem, but the process would take a number of years to complete.
A lack of detail on the Government’s National Asset Management Agency (Nama), particularly in relation to the pricing of the assets to be transferred across “is creating both uncertainty as to the overall cost to the State and a lending standstill in the development sector”.
He said it was important the lack of credit be addressed quickly as the drying up of bank lending “continues to impinge on the economy”.
irishtimes.com/newspaper/bre … king30.htm
Larry
June 10, 2009, 1:25pm
#2
Jesus, is 17.5% unemployment now a consensus view? Man oh man that is so fkn terrible. Right back to the very darkest days of the 80’s. The Goodbody chap then continues:
“Worryingly, when employment fell by this extent in Finland in the early 1990s, it took 18 years for it to return to its pre-recession level,” he said.
That sounds about right to me, however I don’t think what we’ll be returning to in those 18 years is “pre-recession levels”…I think it’ll take those 18 years just to return to a healthy, functioning, normal European economy, not a spectacular Tiger one.
Overall, I believe this talk of recovery in Ireland in 2011 to be total bollox because we need to totally re-invent and re-build our entire economy because we have no firgging economy!!! That will not get fixed in 3 years, or even 10 IMO. 18, yeah, maybe.
From Gene Kerrigan’s latest offering: independent.ie/opinion/colum … 64799.html
Unemployment here will be half a million, according even to the optimists. And it won’t go down for years. There’ll be persistent poverty, house foreclosures and social services in flitters. Our kids will email snaps of our grandchildren as they’re born in Sydney, Stuttgart and Scranton. There’ll be social unrest for years.
But, by God, the economy will recover. What they mean by this is that share prices will rise, dividends will be paid, and the executive class will feel confident enough to openly boast about their bonuses. Our suffering will not be in vain.
Im not sure yet that people in Ireland have got their heads around this yet. This problem of ours is not going away any time soon and each one of us will have a friend or family member who will have to leave the country because of it. Unemployment rises in a lift and comes down on an escalator.
rock3r
June 10, 2009, 3:13pm
#4
A lot of it has to do with the level of global inflation in the decade following the global crisis.
If the world reflates this could still be a tolerable country to be in in 7 years time. If not, well goodnight.
What in gods name are you talking about?
Prices are down here across the board. If you bought in the last 5 years you are probably underwater.
