ESRI Quarterly Report

Dreaded_Estate

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http://www.esri.ie/UserFiles/publications/QEC2010Aut_ES.pdf

The two most significant announcements on economic matters since the last Commentary were the release of the Quarterly National Accounts for Q2 2010 on 23 September 2010 and the government’s statement on banking on 30 September. In the case of the former, the news was, at best, disappointing while in the case of the latter, it was horrendous. Both have impacted upon our view of the timing of potential recovery in the economy and on appropriate policy.

We now expect that GNP will contract by 1½ per cent this year, down from - ½ per cent in our Summer Commentary. For GDP, we now expect there to be a decline of ¼ per cent this year. This represents a change on our summer forecast when we expected GDP to grow by ¼ per cent. For 2011, we expect GNP to grow by 2 per cent and for GDP to grow by 2¼ per cent. Again, these are marginally down relative to our last Commentary.
We now expect that employment will average 1.86 million this year, down 68,000 from 2009, a fall of 3½ per cent. We expect the rate of unemployment to average 13¼ per cent. For 2011, we expect the number employed to average 1.85 million and the rate of unemployment to average 13½ per cent.

In the year ending April 2010, the Central Statistics Office (CSO) recorded net outward migration to have been 34,500. This was well below our forecast of 70,000. However, we discuss how this figure of 34,500 seems to be a conservative estimate of the rate of outflow when compared with estimates of migration contained in another CSO publication, namely, the Quarterly National Household Survey. We expect the net outflow in the year ending April 2011 to be 60,000. This is an increase of 10,000 on our earlier forecast.
The General Government Deficit is expected to be 31 per cent of GDP this year, a truly dramatic figure. Of course, almost two-thirds of this is a one-off extraordinary item related to the banking bailout. For 2011, we expect the deficit to be 10 per cent of GDP, based on a budgetary package of €4 billion in savings.

On inflation, we expect HICP inflation to average -1½ per cent this year and + ½ per cent in 2011. For the CPI, the corresponding forecasts are -¾ per cent in 2010 and + 1¾ per cent in 2011. We expect wage growth to be negative in both 2010 and in 2011, at rates of -3 per cent and -1 per cent respectively.
 


Dreaded_Estate

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This is probably what will draw most headlines.

# In our General Assessment, we look at the budgetary challenges facing the country and in particular at the prospects of bringing the deficit down to sustainable levels in a reasonable timeframe. Using the “Low Growth” profile as published by the ESRI in July 2010, we assess what level of savings will be required to achieve a deficit of 3% by 2014. Our calculations suggest that savings of up to €15 billion could be needed, i.e., twice the sum that was under discussion at the time Ireland and the Commission agreed to the 2014 deadline.

# We express a concern over the potential negative impact on the economy of this scale of adjustment over this period of time.

# While the 2014 date strikes us as worryingly ambitious, we are mindful that an extension is highly unlikely and so we must operate within the constraints as presented. Although we have based our forecasts on a budgetary package of €4 billion of savings, it could well be that a higher amount will be sought. Whatever it is, the scale of the task is such that there will be a need for adjustments in current and capital spending and in taxation.
 

spidermom

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All Good so!!!!


SIGH...!!
 

spidermom

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This is probably what will draw most headlines.
They're right...can't be done..not be 2013..it'll kill us altogether.
Labour and FG know it too...they're just fibbing till they can cut a new deal as the new government...WITH A MANDATE!!!
 

j26

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They're factoring in a 0.25% increase in ECB rate next year. At the same time pay expected to fall by 2.75% in real terms, and that's before tax and spending adjustments are factored in

There be pain ahead :cry:
 

DCon

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If only we hadn't turned that corner
 
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MPB

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Ah well, at least the Banks bondholders will still get paid. Nice to see FF have the best interests of it,s citizens at heart. Maybe we should give them a small bonus, as a token of our goodwill, like the shirt off our backs or our first born.
 
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alonso

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sh1t even ESRI are being real, relatively
 

cyberianpan

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Excellent news that the Croke Park deal is now on the table again. Even after it the PS would have been underworked and overpaid. A hugely improved and efficient Ps is essential to our recovery. Right now these overpaid work dodgers are crippling us.
 

politicaldonations

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Reality starting to surface. We are only at the begining of this mess still really im afraid. PS pay bill and welfare payments bill will HAVE to be cut significantly over 4 years if we are to stay soverign. This is what we get for becoming so greedy and materialistic and for voting bertie in 3 times. Much lower living standards are inevitable for vast majority.
 

turdsl

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We are not sovereign, Mr Rihn, is our boss now, a spokesman for him proves that this morning, when he said the 4 year term to get it down to 3% cannot be changed. Our government did not bother to tell us they had handed over our economic sovereignty to the EU. Now we know what the EU officials were doing in the Dept last week.
 

1888bhoys

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Good to see the ERSI agree with Sinn Fein and not all the other parties.we can not get down to the 3% target by 2014.
 

the_rebubblican

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I've long thought that the 2014 target wasn't achievable and this was before the new proposed 15bn programme of cuts. If as is likely we'll have to front up with massive cuts to persuade markets of our capitulation we'll naturally send the economy into a tailspin for 9-12 months as we adjust to the new reality.

This, if the EU and the Germans force this austerity through will mark the end of the romance for Ireland and Europe. It will likely herald the fracturing of European integration as along with Greece, Denmark, UK, France amongst others we'll become super eurosceptic in outlook.

It's easy to sacrifice a small economy like Ireland's to represent Germany's ideal of good financial housekeeping. They must be thanking the gods that it wasn't a bigger economy like Spain that went tits up first.

So after all their good work, Ahern, McCreevy and Cowen will have reduced Ireland to a stagnating economic backwater, a puppet economy wholly dependent on the German taxpayer and the ECB.

10 years of underperformance, emigration and high unemployment, a stellar FF legacy as we approach the centenary of the Rising. They'll be spinning in their graves.
 
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Why does it feel like we are slowly heading towards our death?

Everyone knows it, but we continue to go through the motions knowing what the outcome is going to be.

Its about time our politicians took their own heads out of their bottoms.

 

maxthedog

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As Sartre put it: When the authorities tell the truth, it means they cant think of a better lie.
The lie was when Lenny in Dec 2009, told us "we had turned a corner".

All ZanuFF spin for the next 10 moths was based on that holding onto power.

Whatever the cost to Ireland inc.
 


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