• Due to a glitch in the old vBulletin software, some users were "banned" when they tried to change their passwords at the end of February. This does not apply after the site was converted to Xenforo. If you were affected by this, please contact us.

Irish Economy: Quartely Economic Commentary July 07

pfkf1

Member
Joined
May 19, 2007
Messages
20
Just came accross this on the internet, don't know whether it has been posted up here before, but it makes for some interesting reading:

http://www.finfacts.com/econ2000.htm

To summerise what it says:

An estimated 17% of direct tax revenues came from the property/construction sector in 2006, compared with 4% in 1995.

The ESR says that as the housing boom ends, Gross Domestic Product (GDP) growth will slow to 4.9 per cent this year and fall to 3.7 per cent in 2008.

Investment in housing will fall 4.7 per cent this year and by more than 6 per cent next year

consumer price inflation will decelerate from 4.9 per cent this year to 3.0 per cent in 2008. However, the forecast is based on an assumption that that only one further European Central Bank rate rise of 0.25% to 4.25%

current public spending can be held to a growth rate of 6.5 per cent next year, compared with the 12.7 per cent public spending growth rate expected for 2007.

Unemployment, which ran at a rate of 4.4 per cent in 2006, will increase to 5 per cent next year.

A less buoyant construction industry will mean employment growth will fall from 87,000 new jobs in 2006 to 58,000 this year and 25,000 in 2008.

migration of workers will also fall, with net immigration falling from 70,000 last year to 50,000 in 2007, before halving to 25,000 next year.

it is critical that the economy shifted away from construction and focused more on the services sector and other industries.

correction in the property market could be more severe, with prices falling by 5 per cent each year for the next decade.

Kelly says that up to 60 per cent could be wiped off the real value of houses over the next eight years if the Republic's housing market follows the same pattern as those in other countries.

Adjusted for inflation, this would translate into an annual fall in real average selling prices of 6-7 per cent or 40-60 per cent over the next eight to nine years.

A housing bust in the Republic has the potential to be even more severe than those in other OECD countries because of the strong growth in the number of new houses built here in recent years and because 15 per cent of the housing stock currently lies empty.

In most economies, the housing sector accounts for only 5 per cent of gross domestic product (GDP), but in the Republic, that figure is 15 per cent, the paper says.

house completions would fall to 82,000 in 2007, down from 92,000 last year, and then fall to 76,000 in 2008.

This slowdown contributes to its forecast of a further reduction in real GNP growth next year, with growth of 3.7 per cent anticipated.


The slowdown in economic growth will impact on the public finances, with growth in current revenues halving in 2007 relative to 2006. The ESRI forecast for the Exchequer Balance shows a deficit of €1 billion in 2008, a deterioration of €3.3 billion on 2006.


The trade balance continues to decrease as the growth in imports is expected to outstrip that of exports in 2007 and 2008, despite a favourable international setting. This contributes to the current account deficit widening to over 5 per cent of GNP in 2008.

The ESRI expects employment growth of 2.9 per cent in 2007, slowing to 1.2 per cent in 2008 driven by a deceleration in construction sector employment growth.

----------------------------

It generally looks bad and bleak, if the government do not do enough to stimulate other areas of the economy and not just the construction industry, the could well be a mighty fall.
 


Rapisco

Active member
Joined
Apr 21, 2006
Messages
278
Are ya sure George Lee didnt write that???

Jaysus.....
 

pfkf1

Member
Joined
May 19, 2007
Messages
20
Rapisco said:
Are ya sure George Lee didnt write that???

Jaysus.....
I believe most of the figures are from the ERSI
 

Insider2007

Active member
Joined
Apr 27, 2007
Messages
213
What puzzles me is how the government allowed the Irish economy to be so dependent on the construction sector. Surely they could have seen that this would have caused problems and used targeted measures to try to boost over sectors to compete? In some ways if the Celtic Tiger was largely the Constuction Tiger then the boom had its foundations built on sand. It was foolish.
 

aodh_rua

Active member
Joined
May 15, 2005
Messages
187
Website
drtod.wordpress.com
Insider2007 said:
What puzzles me is how the government allowed the Irish economy to be so dependent on the construction sector. Surely they could have seen that this would have caused problems and used targeted measures to try to boost over sectors to compete? In some ways if the Celtic Tiger was largely the Constuction Tiger then the boom had its foundations built on sand. It was foolish.
Rather than an either\or Celtic\Construction Tiger, there have been two phases of growth. The first ran from the mid-nineties through to around 2001\2002 and was based on competitiveness, export growth and expansion of our productivity. The second was driven by excessive credit, and a lax approach to regulating the lending sector.

In both cases governments have things to their credit, and more recently things they need to take responsibilty for.
 

kerrynorth

Well-known member
Joined
Oct 5, 2005
Messages
1,525
This report has been out a while and I discussed on a thread how way out it is e.g. the ESRI based their forecast for 2008 on 76k completions! Even the AIB now only say about 60k and I reckon around 50k. As a result I reckon 2008 growth at 1pc and for employment to actually contract.
 

jpc

Well-known member
Joined
Jun 14, 2007
Messages
4,252
Easy collection of revenue.Not making politically difficult economic/infastructure decisions has been the defining characteristics of goverment in this country for the last decade and a half.Now we will have to dine on the consequences.
 

Ard-Taoiseach

Well-known member
Joined
Aug 11, 2007
Messages
746
And yet office market take up is set to top last year's record, the CSO has upgraded its 2005 growth figures to 5.9%, business start-ups remain strong, exports are up 9% on last year, retail sales are a whopping 9.9% up and we're supposed to have 4.9% GDP growth this year, nonsense.

Btw, the EU allows us to borrow €5 billion a year under the Stability and Growth Pact and most of our capital spending comes out of current income, thereby distorting the budgetary situation of Ireland. Most countries fund capital expenditure out of long-term income such as a 20 year bond, this means we have plenty of wriggle room even if an economic slowdown occurs.
 

Coles

Well-known member
Joined
Sep 30, 2006
Messages
2,040
Ard-Taoiseach said:
And yet office market take up is set to top last year's record, the CSO has upgraded its 2005 growth figures to 5.9%, business start-ups remain strong, exports are up 9% on last year, retail sales are a whopping 9.9% up and we're supposed to have 4.9% GDP growth this year, nonsense.

Btw, the EU allows us to borrow €5 billion a year under the Stability and Growth Pact and most of our capital spending comes out of current income, thereby distorting the budgetary situation of Ireland. Most countries fund capital expenditure out of long-term income such as a 20 year bond, this means we have plenty of wriggle room even if an economic slowdown occurs.
That's great news, Ard-Taoiseach! I think I'll run out and max my credit card. Might even buy a few houses... :roll:
 

theyshootPDsdontthey

Active member
Joined
May 21, 2007
Messages
103
Ard-Taoiseach said:
And yet office market take up is set to top last year's record, the CSO has upgraded its 2005 growth figures to 5.9%, business start-ups remain strong, exports are up 9% on last year, retail sales are a whopping 9.9% up and we're supposed to have 4.9% GDP growth this year, nonsense.

Btw, the EU allows us to borrow €5 billion a year under the Stability and Growth Pact and most of our capital spending comes out of current income, thereby distorting the budgetary situation of Ireland. Most countries fund capital expenditure out of long-term income such as a 20 year bond, this means we have plenty of wriggle room even if an economic slowdown occurs.
Are you freedom lover n disguise? ;) ;)
 

freedomlover

Active member
Joined
May 16, 2007
Messages
198
theyshootPDsdontthey said:
Ard-Taoiseach said:
And yet office market take up is set to top last year's record, the CSO has upgraded its 2005 growth figures to 5.9%, business start-ups remain strong, exports are up 9% on last year, retail sales are a whopping 9.9% up and we're supposed to have 4.9% GDP growth this year, nonsense.

Btw, the EU allows us to borrow €5 billion a year under the Stability and Growth Pact and most of our capital spending comes out of current income, thereby distorting the budgetary situation of Ireland. Most countries fund capital expenditure out of long-term income such as a 20 year bond, this means we have plenty of wriggle room even if an economic slowdown occurs.
Are you freedom lover n disguise? ;) ;)
No, Ard-Taoiseach is much more knowledgeable about economics and much more up-to-date with his figures than I am.
 

Ard-Taoiseach

Well-known member
Joined
Aug 11, 2007
Messages
746
theyshootPDsdontthey said:
Ard-Taoiseach said:
And yet office market take up is set to top last year's record, the CSO has upgraded its 2005 growth figures to 5.9%, business start-ups remain strong, exports are up 9% on last year, retail sales are a whopping 9.9% up and we're supposed to have 4.9% GDP growth this year, nonsense.

Btw, the EU allows us to borrow €5 billion a year under the Stability and Growth Pact and most of our capital spending comes out of current income, thereby distorting the budgetary situation of Ireland. Most countries fund capital expenditure out of long-term income such as a 20 year bond, this means we have plenty of wriggle room even if an economic slowdown occurs.
Are you freedom lover n disguise? ;) ;)
No I am not, as freedomlover has so flatteringly stated. now run along, my dear subject, my spy drones detect its 10 minutes past your bed-time!
 

ruserious

Well-known member
Joined
Jan 3, 2011
Messages
29,090
Just came accross this on the internet, don't know whether it has been posted up here before, but it makes for some interesting reading:

Ireland Economy Irish Economic Information News Reports Celtic Tiger, Property Boom, Bubble - Report : Finfacts

To summerise what it says:

An estimated 17% of direct tax revenues came from the property/construction sector in 2006, compared with 4% in 1995.

The ESR says that as the housing boom ends, Gross Domestic Product (GDP) growth will slow to 4.9 per cent this year and fall to 3.7 per cent in 2008.

Investment in housing will fall 4.7 per cent this year and by more than 6 per cent next year

consumer price inflation will decelerate from 4.9 per cent this year to 3.0 per cent in 2008. However, the forecast is based on an assumption that that only one further European Central Bank rate rise of 0.25% to 4.25%

current public spending can be held to a growth rate of 6.5 per cent next year, compared with the 12.7 per cent public spending growth rate expected for 2007.

Unemployment, which ran at a rate of 4.4 per cent in 2006, will increase to 5 per cent next year.

A less buoyant construction industry will mean employment growth will fall from 87,000 new jobs in 2006 to 58,000 this year and 25,000 in 2008.

migration of workers will also fall, with net immigration falling from 70,000 last year to 50,000 in 2007, before halving to 25,000 next year.

it is critical that the economy shifted away from construction and focused more on the services sector and other industries.

correction in the property market could be more severe, with prices falling by 5 per cent each year for the next decade.

Kelly says that up to 60 per cent could be wiped off the real value of houses over the next eight years if the Republic's housing market follows the same pattern as those in other countries.

Adjusted for inflation, this would translate into an annual fall in real average selling prices of 6-7 per cent or 40-60 per cent over the next eight to nine years.

A housing bust in the Republic has the potential to be even more severe than those in other OECD countries because of the strong growth in the number of new houses built here in recent years and because 15 per cent of the housing stock currently lies empty.

In most economies, the housing sector accounts for only 5 per cent of gross domestic product (GDP), but in the Republic, that figure is 15 per cent, the paper says.

house completions would fall to 82,000 in 2007, down from 92,000 last year, and then fall to 76,000 in 2008.

This slowdown contributes to its forecast of a further reduction in real GNP growth next year, with growth of 3.7 per cent anticipated.


The slowdown in economic growth will impact on the public finances, with growth in current revenues halving in 2007 relative to 2006. The ESRI forecast for the Exchequer Balance shows a deficit of €1 billion in 2008, a deterioration of €3.3 billion on 2006.


The trade balance continues to decrease as the growth in imports is expected to outstrip that of exports in 2007 and 2008, despite a favourable international setting. This contributes to the current account deficit widening to over 5 per cent of GNP in 2008.

The ESRI expects employment growth of 2.9 per cent in 2007, slowing to 1.2 per cent in 2008 driven by a deceleration in construction sector employment growth.

----------------------------

It generally looks bad and bleak, if the government do not do enough to stimulate other areas of the economy and not just the construction industry, the could well be a mighty fall.
Reading back on this OP 5 years on is like watching a car crash in slow motion. Interesting comments too.
 

Mackers

Well-known member
Joined
Jan 24, 2011
Messages
5,453
I was listening to a couple of Economists discussing Irelands deficit and one of them stated that after two years or so of austerity that the deficit has actually risen by 2 billion Euro? From 18 billion a year to 20 billion I think was mantioned. Surely this cannot be the case? Can anyone enlighten me on this? Thanks.
 

hammer

Well-known member
Joined
Jul 6, 2009
Messages
58,180
We`ve turned the corner :)

Debt interest 2014 will be €10,400,000,000........I kid you not.
 

Mackers

Well-known member
Joined
Jan 24, 2011
Messages
5,453
We`ve turned the corner :)

Debt interest 2014 will be €10,400,000,000........I kid you not.
As Butch Cassidy said to The Sundance Kid. "Phew! thank God for that, for a minute there I thought we were in trouble.":roll:
 

Marvar88

Well-known member
Joined
Dec 13, 2010
Messages
2,844
I was listening to a couple of Economists discussing Irelands deficit and one of them stated that after two years or so of austerity that the deficit has actually risen by 2 billion Euro? From 18 billion a year to 20 billion I think was mantioned. Surely this cannot be the case? Can anyone enlighten me on this? Thanks.
No. They are wrong.

When you hear that we are meeting the Troika targets that means our deficit is falling. At the end of this year we expect to have a deficit of about 8% this year down hugely from a few years ago.
 


New Threads

Popular Threads

Most Replies

Top