Quarterly Economic Commentary, Spring 2009

29/04/2009

Quarterly Economic Commentary, Spring 2009

Dr. Alan Barrett, Dr. Ide Kearney, Jean Goggin (ESRI) Some of the main findings of the analysis include:

• The wave of poor outcomes and indicators in recent months has led us to cut our forecast for 2009, from -4.6 percent in our Winter Commentary to -9.2 percent (on a GNP basis).
• For 2010, we expect to see a moderation in the pace of decline and for GNP to fall by 1.2 percent.
• Our forecasts suggest that Ireland's economy will contract by around 14 percent over the three years 2008-2010. By historic and international standards, this is a truly dramatic development. Prior to this the largest decline for an industrialised country since the 1930s had been in Finland, where real GDP declined by 11 percent between 1990 and 1993.
• We now expect employment in 2009 to be 187,300 lower than in 2008, on an annual average basis. Corresponding to this fall in employment, we expect to see the number unemployed averaging 292,200 in 2009, an increase of 155,500 on the 2008 figure (or 114 percent). This implies that the unemployment rate would average 13.2 percent.
• For 2010, we expect further employment falls, amounting to 102,800. We expect unemployment to rise by a further 73,300 and the rate to average 16.8 percent in 2010.
• We expect the General Government Deficit to be 12 percent of GDP in 2009 but for this to fall to 11.5 percent in 2010. These forecasts take account of the measures announced in the April 7th Budget and assume full implementation in 2010.
• We have not, however, included any quantification of the possible impact on the public finances of the National Asset Management Agency.
• In the General Assessment, the overall negative picture is noted but we also draw attention to some positive developments since our winter Commentary. Our assessment of the fiscal measures introduced in February and April is broadly positive and we see these as important moves in the direction of restoring fiscal sustainability.
• While a comprehensive assessment of NAMA is not possible at this point due to the lack of full details, the movement towards decisive action on the banking situation is a positive development.

Notes for Editors:

1. The Quarterly Economic Commentary, Spring 2009, by Dr. Alan Barrett, Dr. Ide Kearney, and Jean Goggin (ESRI), will be published online on Wednesday 29th April 2009. Please note that the embargo will be until 00:01 a.m. Wednesday 29th.

2. Members of the media are invited to attend a media briefing at 10.00 a.m. on Tuesday 28th April., in the ESRI (Whitaker Square, Sir John Rogerson's Quay, Dublin 2).

3. This Quarterly Economic Commentary includes four articles in the new ESRI Research Bulletin. See below for further details.

ESRI Research Bulletin, April 2009 The ESRI is launching a new Research Bulletin to make ESRI research findings more accessible to a wide audience. The articles are short, non-technical summaries of work published by ESRI staff in journal articles, books and book chapters and research reports. Many of these articles summarise research which has been published outside the ESRI and has not been the subject of a media release. Where the article relates to work which has already been the subject of a media release, this is indicated by {media release} below, which links to the media release on the ESRI website. Bulletin articles will go live on the website at www.esri.ie/bulletin as soon as they are ready, and an email will be sent out to the media each quarter listing new articles. To view an article (pdf), simply click on the title below. "Why Worry About Climate Change?" Tol, Richard S. J., ESRI Research Bulletin No. 09/1/1, April '09. "School Leavers: How Are They Faring?" Byrne, Delma, McCoy, Selina, ESRI Research Bulletin No. 09/1/2, April '09. Media Release. "Who is Paying for Regional Balance in Ireland?" Morgenroth, Edgar, ESRI Research Bulletin No. 09/1/3,April '09. "What do We Know about Training at Work?" O'Connell, Philip J, ESRI Research Bulletin No.09/1/4,April '09. Comments and queries relating to individual articles can be sent directly to the authors (email details are on the first page of the article). For queries relating to the Research Bulletin, please email bulletin@esri.ie.

Link to Publication