Dr Loretta O Sullivan

Transcription

1 East Region Committee Event Ireland, Property 2014, Where Next? Dr Loretta O Sullivan Chief Economist, Bank of Ireland 17 June 2014

2 The Irish Economy: Recent developments & outlook The Institute of Banking June 2014 Loretta O Sullivan Chief Economist Bank of Ireland

3 Disclaimer This document has been prepared by the Economic Research Unit at The Governor and Company of the Bank of Ireland ( BOI ) for information purposes only and BOI is not soliciting any action based upon it. BOI believes the information contained herein to be accurate but does not warrant its accuracy nor accepts or assumes any responsibility or liability for such information. Any decision made by a party after reading this document shall be on the basis of its own research and not be influenced or based on any view or opinion expressed by BOI either in this document or otherwise. This document does not address all risks and cannot be relied on for any investment contract or decision. A party should obtain independent professional advice before making any investment decision. Expressions of opinion contained in this document reflect current opinion as at 10 th June 2014 and is based on information available to BOI before that date. This document is the property of BOI and its contents may not be reproduced, either in whole or in part, without the express written consent of a suitably authorised member of BOI. The Governor and Company of the Bank of Ireland is regulated by the Central Bank of Ireland. In the UK, The Governor and Company of the Bank of Ireland is authorised by the Central Bank of Ireland and the Prudential Regulation Authority and subject to limited regulation by the Financial Conduct Authority and the Prudential Regulation Authority. Details about the extent of our authorisation and regulation by the Prudential Regulation Authority and regulation by the Financial Conduct Authority are available from us on request. The Governor and Company of the Bank of Ireland is incorporated in Ireland with limited liability. Registered Office - 40 Mespil Road, Dublin 4, Ireland. Registered Number - C-1.

4 Overview I. Recovery underway II. III. The outlook Final remarks 3

5 Overview I. Recovery underway II. III. The outlook Final remarks 4

6 The recovery % (constant prices) GDP growth 5

7 ... is following the typical path for a small open economy Exports recover Investment picks up Employment rises Consumer spending improves 6

8 Exports supported by bn (constant prices) (seasonally adjusted) c. 9% above pre-crisis peak 41 Pre-crisis peak Crisis low point Exports

9 competitiveness and Change , % Germany UK 10 Euro Area Poland France Italy Unit labour costs Portugal US Unit labour costs -10 Ireland Greece Spain -15 8

10 a recovery in trading partners Real GDP, annual change, % Destination for c. 2/5th of Irish exports c. 1/5th of exports c. 1/5th of exports 9

11 Investment has rebounded Annual change, % (constant prices) Building Machinery & equipment (excl. planes) Investment 10

12 with scope for further increases % Investment as a share of GDP 5 Long run average

13 including on the residential side s of units com plet ed Residential investment

14 Employment is increasing 16 % Annual change, % Employment (rhs) Unemployment Rate (lhs) -9 13

15 Agriculture Accommodation and food Professional, scientific and technical Construction Information and communication Administrative Education Public administration Transportation Industry Other Financial, insurance and real estate Health and social work Wholesale and retail trade 000s, annual change and broadening out across sectors Employment by sector in Q

16 and regions s, annual change 25 Employment by region in Q Dublin South-East BMW Mid-East Mid-West South-West 15

17 which will support consumer spending Annual change, % (constant prices) Q Consumer Spending Retail Sales 16

18 Overview I. Recovery underway II. The outlook III. Final remarks 17

19 Healthy order books Index > 50: expansionary territory New Export Orders - Manufacturing PMI New Export Orders - Services PMI

20 ... point to stronger export growth Annual change, % 10 (constant prices) Exports Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q

21 Improving business sentiment Confidence in situation facing business over the next 12 months More Less No difference Net 49 Net 59 Net 47 Net 48 Net 40 0 Total Dublin Rest of Leinster Munster Connaught/Ulster 20

22 ... and construction activity Index > 50: expansionary territory Construction PMI

23 ... supporting investment 25 Annual change, % (constant prices) Investment Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q

24 Rise in confidence Index Consumer Sentiment (3 month moving average)

25 ... and further employment gains % Annual change, % Employment (rhs) Unemployment Rate (lhs) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q

26 ... to feed through to consumer spending Annual change, % (constant prices) Consumer Spending Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q

27 Positive and more balanced growth 8 Annual change, % Contributions, % pt (constant prices) Net Exports Domestic Demand GDP

28 Overview I. Recovery underway II. The outlook III. Final remarks 27

29 In a nutshell o Typical recovery path o Broadening out of activity to continue... o o... supporting the labour market Positive growth this year & next 28

30 BOI Economic Research Unit forecasts (May 2014) Economic Outlook 2013 (e) 2014 (f) 2015 (f) % change unless otherwise stated Consumer Spending Government Spending Investment Construction Machinery & Equipment Exports Imports GDP GNP Employment Annual increase in numbers employed 44,000 42,000 39,000 Unemployment Rate (%, annual average) Inflation

31 Thanks for your attention The latest BOI ERU Outlook on the Irish Economy can be found at: publications/general-publications/bank-of-irelandthe-outlook-may-2014.pdf Data sourced from the CSO, European Commission, IMF, Department of the Environment, Community and Local Government, Investec, Bank of Ireland, Ulster Bank and KBC/ESRI 30