IBEC Sees 1% Growth For Ireland This Year

IBEC, the group that represents Irish business, today published its latest Quarterly Economic Outlook, which said that the Irish economy will grow again this year, despite the slowdown in activity in our main trading partners, and plant and machinery investment is set to rise by 10%. The Outlook, which contains a section on the economics of the Stability Treaty, also said that there is nothing in the treaty that will require additional austerity in future years and that ratification would boost the country’s growth prospects.

IBEC Chief Economist Fergal O’Brien said: “Following a return to economic growth in 2011 for the first time in four years, the economy will grow by 1% this year. International trading conditions remain difficult, but exporters continue to benefit from competitiveness improvements and the weaker euro has helped exports to non-eurozone countries. Investment by industry in new equipment and machinery will grow again this year, reflecting the strong export performance of recent years and Ireland’s on going attractiveness to FDI investment. The jobs outlook has also improved somewhat over recent months and the export recovery has meant that job creation has exceeded job losses for the first time since 2007.

“The result of the referendum on 31 May will have a direct impact on the Irish economy. A yes vote is crucial to our future economic prospects. The treaty will provide a better set of rules for the public finances and help ensure that Ireland remains an attractive location for investment. Crucially, from a business perspective, it will make it easier for Irish corporates to raise funding in international debt markets,” said Mr O’Brien.

Irish Drinks Exports Valued At Over €1bn

The Drinks Industry Group of Ireland (DIGI) has published a new report, Beverage Exports 2000-2011, by Anthony Foley of Dublin City University Business School, detailing the value of Irish alcohol drinks exports at over €1 billion.

The report shows that the impact of beverage exports on the domestic economy far outweighs other products manufactured in Ireland for international markets, due to the high level of locally sourced inputs. The report also shows that while the United Kingdom and North America continue to be the main markets for Irish beverages overseas, that there is major potential for additional sales to China, India and other major emerging markets.

The DIGI said that given that the Government has identified exports as central to our economic recovery, the industry will work closely with them to build on current successes, identify new markets for its products, and remove any barriers to trade that exist in some of these emerging economies.

The Chairman of DIGI, Kieran Tobin, said that he was very pleased that the Minister of State at the Department of Agriculture, Food and the Marine, Shane McEntee TD, was in attendance at today’s event at the Old Jameson Distillery, Smithfield, to officially launch the report.

Mr Tobin commented, ‘This report details the extent to which the Irish drinks industry is responsible for some of Ireland’s most celebrated and internationally recognised brands which are available in over 100 markets overseas. For a small country such as Ireland, to be in the top 12 global drinks exporters is something of which we should be extremely proud.

Mr Tobin concluded, ‘It is important to remember that the success of Irish drinks exports is founded on a solid domestic market that provides over 60,000 jobs in the manufacture, distribution and sale of alcohol. The drinks industry is also a major contributor to tourism – a further strong earner of overseas revenue – through its pubs, its brands and visitor centres. We should therefore seek to support this important sector of the national economy to the greatest extent possible to assist our much-needed export-led economic recovery.’

Eurozone Austerity Measures Deepening Jobs Crisis

On the day that the government announced the date for the EU Fiscal Treaty (31st May), the International Labour Organisation (ILO) has released a report which states that the Eurozone austerity measures are deepening the Jobs crisis in many EU countries.

The ILO’s “World of Work Report 2012: Better Jobs for a Better Economy” says that around 50 million jobs are still missing compared to the situation that existed before the crisis. It also warns that a new and more problematic phase of the global jobs crisis is emerging.

First, this is due to the fact that many governments, especially in advanced economies, have shifted their priority to a combination of fiscal austerity and tough labour market reforms. The report says such measures are having devastating consequences on labour markets in general and job creation in particular. They have also mostly failed to reduce fiscal deficits.

The narrow focus of many Eurozone countries on fiscal austerity is deepening the jobs crisis and could even lead to another recession in Europe”, said Mr. Raymond Torres, Director of the ILO Institute for International Labour Studies and lead author of the report.

Countries that have chosen job-centred macroeconomic policies have achieved better economic and social outcomes”, added Mr. Torres. “Many of them have also become more competitive and have weathered the crisis better than those that followed the austerity path. We can look carefully at the experience of those countries and draw lessons.”

Second, in advanced economies, many jobseekers are demoralized and are losing skills, something which is affecting their chances of finding a new job. Also, small companies have limited access to credit, which in turn is depressing investment and preventing employment creation. In these countries, especially in Europe, job recovery is not expected before the end of 2016 – unless there is a dramatic shift in policy direction.

Third, in most advanced economies, many of the new jobs are precarious. Non-standard forms of employment are on the rise in 26 out of the 50 economies with available information.

The report says that fiscal austerity combined with labour market deregulation will not promote employment prospects in the short term. In general, there is no clear link between labour market reforms and higher employment levels. Moreover, some recent reforms – especially in Europe – have reduced job stability and exacerbated inequalities while failing to create jobs.

However, the report argues that if a job-friendly policy-mix of taxation and increased expenditure in public investment and social benefits is put in place, approximately 2 million jobs could be created over the next year in advanced economies.

Other main findings of the report include:

-          Employment rates have increased in only 6 of 36 advanced economies (Austria, Germany, Israel, Luxembourg, Malta and Poland) since 2007.

-          Youth unemployment rates have increased in about 80 per cent of advanced countries and in two-thirds of developing countries.

-          Poverty rates have increased in half of developed economies and in one-third of developing economies, while inequality rose in half of developed countries and one-fourth of developing economies.

-          On average, more than 40 per cent of jobseekers in advanced economies have been without work for more than a year. The majority of developing economies show a decline in both long-term unemployment and inactivity rates.

-          Involuntary part-time employment has increased in two-thirds of advanced economies. Temporary employment has also risen in more than half of these economies.

-          The share of informal employment stands at more than 40 per cent in two-thirds of emerging and developing countries.

-          In 26 out of the 40 countries for which information is available, the proportion of workers covered by a collective agreement declined between 2000 and 2009.

-          28 per cent of the selected group of emerging and developing countries implemented policies to reduce social benefits during the crisis compared to 65 per cent in advanced economies

-          At 19.8 per cent of GDP in 2010, global investment remains 3.1 percentage points lower than the historical average, with a more pronounced downward trend in advanced economies. In all regions, investment in small firms has been impacted disproportionately by the global crisis.

Are We Turning The Proverbial Corner?

KBC Bank Ireland & Chartered Accountants Ireland have brought out a survey which they say is the most positive business climate since 2007.

The new survey revealed an improvement in activity levels across a wide range of Irish businesses in early 2012.

The survey revealed:

-That job gains are now matching job losses for the first time in over four years.

-  significant divergences remain between sectors, the first part of the year was less difficult for most companies.

- that while the next 12 months will be difficult for Irish firms, the economic recovery is expected to strengthen and broaden.

The survey found that while Irish businesses are taking a very cautious view of the economic outlook, it predicted that the recovery will be firmly established within three years.

The overall outlook was that while businesses are still very cautious about the economy and there is a belief that a recovery will be well on it’s way by 2015.

Ireland Can Grow Twice As Fast As The EU

At a breakfast briefing in the Aviva Stadium, Dublin, IBEC today launched its ‘Driving Ireland’s Recovery campaign: The business community’s ambition for Ireland’, and said the Irish economy has the potential to grow by 3-4% per year, over twice the EU average, over the next 20 years. To achieve this, IBEC said we need to adapt the successful economic model that delivered the sustainable, pre-property boom growth of the 1990s, and take decisive steps to address immediate economic challenges.

At the briefing IBEC Director General Danny McCoy said: “Today the business community declares its ambition to drive the recovery. Business can generate the growth needed to create jobs, overcome our debt burden and deliver the prosperity, public services, and quality of life that this country can legitimately aspire to. There is no reason why Ireland cannot be one of the EU’s most prosperous and successful regions and the best country in the world to do business.

“The focus must move from austerity and stabilisation, to growth and possibility. We have a large and educated workforce; our indigenous companies have the ability to match the productivity of the multinationals and our infrastructure is vastly improved. The property boom sucked investment and talent from other parts of the economy, we now need to redirect and reinvest these elements in a way that delivers sustainable growth.

“All of this means we have the capacity to recover faster and stronger than others. We have done it before; we can do it again. Yes there are challenges and they not insignificant, but we have created momentum. We are steadily regaining the trust and belief of our competitors, financial markets and international commentators. We now need to believe it ourselves and bring that confidence home.

Exports Fall As Trade Surplus Drops As Predicted

The Central Statistics Office has released figures that show the value of Ireland’s exports and imports fell in February.

Seasonally adjusted exports fell by €1.053bn between January and February 2012 – from €8.3bn to €7.3bn – while imports fell from €4.5bn to €3.7bn during the same period, the CSO said. As a result the trade surplus declined by nearly €200m.

Exports were down 4% on the same time in 2011, with imports declining 10% year-on-year.

Chief economist with Davy Research Conall Mac Coille said export growth has slowed markedly through 2011.

“Annual export growth in Q4 2011 was 3.5%, down from 7.0% in the year to Q4 2010,” Mr Mc Coille said.

“Today’s trade data paint a broadly similar picture and do not change our view that Irish export growth will slow sharply in 2012.”

The Cost Of Living In Ireland Rises by 2.2%

The cost of living in Ireland has increased by 2.2% in the last twelve months according to official figures revealed today from the Central Statistics Office

Inflation jumped by nearly 1% in March, while higher fuel costs pushed up transport prices. High street sales went upwards and clothing and footwear costs also rose.

Increases in Education (+9.4%), Transport (+7.6%), Alcoholic Beverages & Tobacco (+3.9%) and Miscellaneous Goods & Services (+3.7%) all contributed to the rise.

There were decreases in Furnishings, Household Equipment & Routine Household Maintenance (-2.1%), Recreation & Culture (-0.7%) and Clothing & Footwear (-0.7%).

The most significant monthly price changes were increases in Transport (+4%), Clothing & Footwear (+2.7%) and Miscellaneous Goods & Services (+1.7%).