2016 Economic Outlook for Ireland & Eurozone IFP Launch

Transcription

1 2016 Economic Outlook for Ireland & Eurozone IFP Launch December 3 rd 2015 Jim Power

2 Global Background US & UK growing at reasonable pace Euro Zone growing well below potential Emerging markets in some difficulty China! Policy will very accomodative in Euro Zone US rates set to rise very gradually, UK cycle less clear Oil & Commodity prices weak Euro weakness to persist Migration crisis has highlighted yet again the lack of policy coherence at EU level

3 UK GDP (YoY)

4 US GDP (YoY)

5 Euro Zone Economic Checklist GDP ( YoY) Inflation (YoY) Unemployment Euro Zone 1.6% +0.1% 10.8% Germany 1.7% +0.2% 4.5% France 1.2% +0.2% 10.7% Italy 0.9% +0.3% 11.8% Spain 3.4% -0.9% 21.6% Netherlands 1.9% +0.4% 6.8% Belgium 1.3% +1.2% 8.7% Greece -0.4% -0.1% 25.0% Portugal 1.4% %

6 Euro Zone GDP (YoY)

7 USD v EURO

8 Sterling v Euro

9 Euro Zone in 2015 Economic growth to remain below potential GDP 1.5% 2015, 1.8% in 2016? ECB will struggle to hit 2% inflation target set to remain weak (I think) ECB may cut deposit rate further and increase monthly QE target Greater clarity needed on policy & governance

10 Ireland-Activity Has Surpassed ,000 50,000 40,000 30,000 20,000 10,000 0 GDP at Constant (Chain linked annually ref to 2013) Market Prices (Seasonally Adjusted) (Euro Million) GNP at Constant (Chain linked annually ref to 2013) Market Prices (Seasonally Adjusted) (Euro Million)

11 The Irish Economy in 2015 Compelling economic recovery more broadly based Consumer stronger, but price compression still relevant Strong car sales +30% Strong merchandise exports +19.3% Labour market much better Consumer confidence at 9-year high Tax Revenues +9.6% Construction activity improving Prospects for 2016 positive but arrogance & complacency dangerous

12 Ireland-Consumer Price Inflation Jan-00 Jun-00 Nov-00 Apr-01 Sep-01 Feb-02 Jul-02 Dec-02 May-03 Oct-03 Mar-04 Aug-04 Jan-05 Jun-05 Nov-05 Apr-06 Sep-06 Feb-07 Jul-07 Dec-07 May-08 Oct-08 Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12 May-13 Oct-13 Mar-14 Aug-14 Jan-15 Jun-15

13 Feb-98 Aug-98 Feb-99 Aug-99 Feb-00 Aug-00 Feb-01 Aug-01 Feb-02 Aug-02 Feb-03 Aug-03 Feb-04 Aug-04 Feb-05 Aug-05 Feb-06 Aug-06 Feb-07 Aug-07 Feb-08 Aug-08 Feb-09 Aug-09 Feb-10 Aug-10 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Ireland-Unemployment Rate (%)

14 Ireland-Employment 2015 SECTOR ANNUAL CHANGE EMPLOYMENT % OF TOTAL Agriculture F&F +3, , % Industry +13, , % Construction +15, , % Wholesale & Retail Trade -1, , % Transportation & Storage +2,500 90, % Accommodation & Food Services , % Information & Communication +4,400 83, % Financial, Insurance & Real Estate -3,300 99, % Professional & Scientific +5, , % Administrative & Support Services +2,800 68, % Public Admin & Defence +3, , % Education +2, , % Health & Social Services +3,9,00 253, % Total (may not add up due to rounding & omission of Other Category) +56,000 1,983,00

15 Ireland-Employment (S/A)

16 Jan-95 Aug-95 Mar-96 Oct-96 May-97 Dec-97 Jul-98 Feb-99 Sep-99 Apr-00 Nov-00 Jun-01 Jan-02 Aug-02 Mar-03 Oct-03 May-04 Dec-04 Jul-05 Feb-06 Sep-06 Apr-07 Nov-07 Jun-08 Jan-09 Aug-09 Mar-10 Oct-10 May-11 Dec-11 Jul-12 Feb-13 Sep-13 Apr-14 Nov-14 Jun-15 Ireland-Competitiveness Nominal HCI (Monthly average) Real HCI (Deflated by consumer prices) Real HCI (Deflated by producer prices)

17 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Ireland-House Price Index National - all residential properties National excluding Dublin - all residential properties Dublin - all residential properties

18 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 (Jan 2005=100) Private Rents

19 Ireland-New Mortgage Lending FTB Purchase Mover Purchase RIL Purchase Re-mortgage Top-up

20 Ireland-PDH Mortgage Arrears >90 Days Q Q Q Q Q Q Q Q Q Q Q Q215

21 What is pushing the Residential Market? National Prices +35.4% off lows: Dublin +52.7%; Rest +24.1% Year to Date National +7.6%; Dublin 4.5%; Rest 8.6% Rental market chaotic Private Rents 35.6% off lows Pent-Up Demand meets Limited Supply Improved confidence about future Economic recovery Stronger labour market Mortgage market showing some signs of life Central Bank limits having impact sensible policy Needs to be focus on increasing supply 21

22 Prospects for 2016 GDP 6.3% % Consumer expenditure will be boosted by employment & earnings growth & Fiscal Policy Construction sector will continue to rebound strongly Business investment spending to grow strongly Unemployment rate could hit 7% Promises to be another good year

23 The Ongoing Issues Oil, weakness, Interest Rates, US & UK growth all good for Ireland China a concern UK & the EU Regional balance Satisfying demand for housing Competitiveness broadly defined - must be the constant focus Preserving the FDI model Credit model for the SME sector Sovereign & Personal Debt Political instability and poor policy popular policies are rarely good policies Economy is moving in right direction, but careful management needed

24 Rebuilding the Irish Economic model Sustainability & Stability key attributes Sectoral diversification focus on competitive advantage Constant search for FDI trends Competitiveness crucial Business costs, Quality of Public Services, Infrastructure, Labour Force, Tax Environment, Credit Model, Political Stability & Sensible Policy IT Infrastructure & Capability crucial

25 % Irish GDP Growth