The Irish economy and the New Normal of 2018 and 2019

Transcription

1 The Irish economy and the New Normal of 2018 and 2019 Corporate Treasury: Mark Hensey Business Banking: Kevin McCarthy Austin Hughes Chief Economist KBC Bank Ireland

2 Sweet or sour? 5 Global Growth IMF forecasts forecast date Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Apr-18 Oct-18 forecasts for

3 An upturn for other people An increased global focus on distributional (and reputational) issues

4 Demographic trends highlight key social and political as well as economic changes

5 Trade tensions risk unravelling a globalised world

6 Old and new both seen past the peak

7 Oceans apart of late

8 Shared currency, divided countries

9 Easier monetary policy is the answer. What was the question?

10 Horses led to water may be drinking shock!

11 Central Banks Driving by the rear view mirror

12 Interest rates turning but market still focussed on low for long

13 Winter is coming

14 Brexit; can it be a gentle stroll along a smooth path to a land of cake and consumption? YouGov 29 Nov

15 Project fear strikes again

16 Divided they stand?

17 I m an empire, get me out of here The UK border: preparedness for EU exit 24 OCTOBER 2018 Key system developments are at risk. In September 2018, BDG reported that 11 of 12 major projects to replace or change key border systems were at risk of not being delivered on time and to acceptable quality Infrastructure identified by government departments cannot be built before March Without the necessary infrastructure, HMRC, Border Force and others may not be able to fully enforce compliance regimes at the border on day one. They are exploring alternative options Businesses do not have enough time to make the changes that will be needed if the UK leaves the EU without a deal. Government departments can only implement some of the changes that are required at the border. They are also heavily dependent on third parties, such as traders, being well-informed and making changes to their systems and behaviour.. Government papers from July 2018 stated that it was already too late to ensure that all traders were properly prepared for no deal... Plans are progressing to cope with issues such as queues of traffic in Kent, and to enable the continued supplies of essential goods and medicines In the event of no deal, departments accept that border operations will be less than optimal on day one.. The government has not defined what less than optimal might mean

18 Sterling already exposed but still vulnerable

19 For Ireland, Brexit is a known unknown 40 Ireland s key trading partners 2015 (share of trade in goods and services) UK US Non-UK EU exports imports total trade

20 Precise scale of Brexit impacts still uncertain but aggregate estimates miss the point

21 Brexit hasn t been a real shock so far

22 But some areas are suffering

23 Irish Business beginning to focus on downside

24 But the end isn t nigh

25 Precise scale of Brexit impacts still uncertain but where will hurt most seems clear

26 Non-Tariff Barriers a notable threat

27 It s not all bad news.. (even if it mostly is) FDI could be boosted

28 Back to the boom?

29 Jobs growth highlights current momentum

30 The turn in the Irish economy is forcefully seen in strong and sustained growth in employment

31 Dublin and Border the standouts but regional job gains remain choppy

32 Pay picking up, not powering ahead

33 Overheating worries overdone but that doesn t mean there aren t problems

34 Once bitten.

35 Housing market still a major problem

36 Jobs Growth and Property Market Telling Broadly Similar Stories

37 Housing market slowly moving towards balance but path likely to remain bumpy

38 Fundamentals still fair?

39 The housing market remains central to wealth and woe

40 Fiscal constraints less binding than they appear

41 Can we avoid another own goal? Stock of FDI as % of GDP,2015 (source OECD) LUX IRL NLD BEL EST HUN CZE SWE LVA PRT EU SVK GBR AUT ESP POL OECD FIN ISR DNK USA SVN FRA DEU ITA GRC KOR JPN

42 A gradually ageing population creates opportunities as well as problems years years years years years years 65+ years Employment, Total

43 In case I forgot something.

44 Summary The New Normal is a world of rapid change but slower growth, lower rates and continuing surprises Uncertainty and localised shocks key features of new global backdrop Central Banks starting to normalise. What sort of rate rises are coming and where? Some further Brexit twists to come Irish recovery strong and sustainable but challenged by Brexit and tax wars uneven sectorally and geographically still scarred by the crisis Not notably improved by Budget 2019

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