Irish Economy Thread

[odlum833]

Irish 10 year bond yield now trading at just 3.53%. That could be a record low!

[Dvblvnia]

Some bad news on the manufacturing sector yesterday which is slightly worrying. I do hope that the last two months have been an exception and that this is just a soft patch that the manufacturing sector will recover towards the end of the year. Still, considering the virtual recession in the €urozone, the UK and the sluggish recovery in the US, we've done well to have growth in our industrial economy for at least 90% of the time over the last 12 months.

[Catmalojin]

Bord Gáis Energy sales process kicks off
Updated: 18:18, Friday, 03 May 2013

Government selling Bord Gáis Energy as part of asset disposal programme agreed with Troika

Bord Gáis Éireann said this evening that it has started the sale process for its energy business Bord Gáis Energy

The Government is selling the company as part of an asset disposal programme agreed with the Troika and it has been claimed that the sale price could hit over €1 billion.

The company's profits grew by 30% to almost €121m last year.

British group Centrica, French utility GDF Suez and German operator Eon have all been named as possible bidders for the Irish business, which some reports claimed will have a price tag of over €1 billion.

The company's finance director Michael G O'Sullivan said today marked ''an important milestone in the sale of Bord Gáis Energy''.

He said that subject to market conditions, the sale is expected to be concluded by the end of this year.

Bord Gáis Éireann is made up of two major divisions - Bord Gáis Networks, which will remain in State ownership, and Bord Gáis Energy, the energy division.

Bord Gáis Energy operates in the generation and supply market and has about 775,000 customers here. It also has a wide portfolio of onshore wind assets as well as an energy supply and distribution network business in Northern Ireland.

Bord Gáis Networks owns, develops and operates the natural gas transmission and distribution networks in Ireland, as well as the two natural gas interconnectors between Ireland and the UK.

Story from RTÉ News:
http://www.rte.ie/news/business/2013...d-gais-energy/

At least they're not making the same mistake that occurred with the privatisation of Eircom and keeping the network in public hands.

[belfastuniguy]

Publicly owned telecom networks don't really work IMO and historically have suffered from poor innovation and development. Some businesses just work better in private hands.

Gas isn't one of them IMO

[odlum833]

Irish sovereign 10 year bond yield is at just 3.41% this morning. Yields under real pressure atm as the price rises. The government has no problem financing itself. But for political purposes best to keep the troika in the background till the end of the year i'd suggest.

Bare in mind the 10 year bond auction just last month which was 5 times over subscribed - those banks and institutions have made a mint! They bought at 4.1%!!!

[Catmalojin]

From the Irish Independent:

Economy 'set to expand by 2.7%'

16 MAY 2013

The economy could grow by as much as 2.7% next year if forecasts of a global revival materialise, a leading think-tank has claimed.

Despite the projected upturn, advisers at the Economic and Social Research Institute (ESRI) have urged the Government to press on with plans to save more than 5 billion euro in the next two budgets.

Its quarterly economic commentary for spring estimates that gross domestic product, the value of all goods and services including the multinationals, will grow by 1.8% this year and 2.7% next year.

It said that the homegrown economy, measured by gross national product and what the ESRI calls a more reliable assessment of Irish business, will increase by just 1.0% this year and 1.5% next year.

The think-tank warned that the Irish economy remains reliant on the international environment as a driver of growth, which it expects to benefit from the impetus given by US spending policies. "This is a crucial assumption for our forecast as exports are the main contributor to Irish economic growth at present," the ESRI said.

The spring forecast noted only a limited change in the unemployment crisis, and forecast the jobless rate to steady at 14.2% this year before falling to 13.9% next year. It put this down mainly to continued net emigration. It said inflation would sit at 1.5% this year and 1.7% next with average hourly earnings to rise by 1.2% and 1.5% over the two years.

The ESRI highlighted the importance of Europe and said that growth will be worse than anticipated if trading performances with our main partners on the continent are not realised.

Its review pointed to the successes the Government has had in easing the state's debt burden both through renegotiating the costly 3.1 billion euro a year Anglo promissory notes and extending maturities on loans from Europe and the International Monetary Fund.

But it urged the coalition to stick to its plan to make savings totalling 5.1 billion euro in budgets next year and 2015. "By doing so the deficit will be eliminated and the public finance contraction will not be weighing on the domestic economy," the think-tank said.

On another front the ESRI also cautioned the Government about the banking sector's ability to meet demand for lending from small and medium sized businesses if economic growth starts to pick-up as forecast. It suggested the Irish banks will not be adequate to deal with the calls for credit.

Press Association

[belfastuniguy]

2.7% seems optimistic, especially given the continued stagnation of the wider Eurozone and slowing growth in Asian economies.

[odlum833]

1.8% this year would probably be the highest in the eurozone - which says something about the eurozone. But it would also be faster than most if not all in the EU. That is quite an optimistic outcome. I think 1.5% this year is more realistic like most economic commentary. It won't have a big effect on unemployment this year and maybe next though. It should tighten it further somewhat however.

I would be surprised (pleasantly) if we reached 1.8% this year. Economies across Europe can only dream of that right now. They are, in total, in recession so despite exports we are going to struggle to hit that - hopefully the US and Asia can provide more than a counter balance.

[Catmalojin]

RTÉ and the Irish Times' take on the news:

Irish growth dependent on European recovery - ESRI
Updated: 07:26, Thursday, 16 May 2013

The Economic and Social Research Institute has said it is likely that growth in output and employment will continue this year and next.

In its latest Quarterly Economic Commentary, the ESRI forecasts growth of 1.8% this year and 2.7% next year.

If these rates are achieved, the ESRI says unemployment should fall just below 14% next year.

However, it says the growth forecast is crucially dependent on the European economy returning to growth in 2014. Without this, the Irish economy will not grow at the forecast rate.

Because of the uncertainty surrounding the international economy, the ESRI says there should be no easing up on the Government's drive to correct the public finances.

All the planned consolidation measures should be implemented as planned over the next few budgets, the institute added.

By doing so it said that "the deficit will be eliminated and the public finance contraction will not be weighing on the domestic economy".

Although the outlook is for an upturn in growth, the ESRI continues to have concerns about the weakness in the domestic Irish economy.

In particular it fears that the banks may not be able to lend enough money into the SME sector if the economy grows as forecast.

Research by the institute finds that access to credit is not the main problem for SMEs now, which is now finding customers for their products or services. But if there is a growth in credit demand by SMEs on the back of a growing economy, the institute questions the capacity of the Irish banking system to meet that rising demand.

Concern over impact of "re-domiciling" on GNP figures

Another research paper looks in detail at the impact of a small number of UK companies that have relocated their registered office to Ireland over concerns at the direction of the UK tax regime.

The CSO has warned for the past year that the relocation or "re-domiciling" of a small number of companies gas been distorting the Irish Gross National Product (GNP) numbers, which has previously been seen as a better guide to the health of the Irish economy than GDP.

The money held by these re-domiciled companies - around €7.4 billion last year, or 5.5% of GNP - is enough to distort the figures. Analysis by Professor John Fitzgerald indicates that these inflows had the effect of reducing the recorded amount of profit outflows by multinationals based in Ireland, which had the effect of raising both the GNP figure and the balance of payments current account surplus.

Taking this into account, Professor Fitzgerald's analysis finds the economic contraction in 2009 was deeper than officially recorded, and that GNP contracted in 2010, rather than the 1% expansion recorded in the official statistics.

It also impacted last year's figures, which officially show GNP expanded by 3.5%, but the ESRI analysis says the real expansion was just over 2%.

The impact on the balance of payments surplus is more dramatic. A surplus on the balance of payments indicates that a country is saving more than it is spending or investing. Usually large surpluses are not sustained, and eventually lead to increased domestic demand as these savings are reduced and spent in the domestic economy.

However Professor Fitzgerald's research suggests that rather than running a current account surplus of 6% of GNP, the real number is closer to 1%. This implies there will be less of a bounce for the domestic economy, as there is not as high a level of savings to be released as previously thought.

Story from RTÉ News:
http://www.rte.ie/news/business/2013...esri-forecast/

Economy to perform better than forecasts, says ESRI
Barry O'Halloran

Last Updated: Wednesday, May 15, 2013, 23:29

Economic growth is likely to reach 1.8 per cent this year, a forecast which is more optimistic than EU and Government predictions, but the expansion is unlikely to tempt consumers to begin spending again and will have little initial impact on unemployment.

In its latest report, independent body, the Economic and Social Research Institute (ESRI), says it believes the economy stabilised last year and could grow by 1.8 per cent this year and by 2.7 per cent in 2014.

Those forecasts are ahead of the most recent predictions for the Republic’s economy from the European Commission, which recently estimated that growth would reach 1.1 per cent this year and accelerate to 2.2 per cent in 2014.

The ESRI’s figures are also more optimistic than those produced by the Government, which last month projected that gross domestic product (GDP), the widest measure of wealth created by an individual country, would expand by 1.3 per cent this year and 2.4 per cent in 2014.

However, the ESRI’s Quarterly Economic Commentary, released today, warns unemployment will remain high despite the growth, while households will either save any spare money or use it to pay off debt instead of spending it.

The report’s authors, David Duffy and Kevin Timoney, warn that unemployment will fall only gradually. They predict 32,000 people will emigrate this year and a further 22,000 will leave in 2014.

The ESRI’s figures show that 316,000 people – 14.7 per cent of the labour force – were out of work in 2012.

The institute expects this to fall to 305,000 this year and to 298,000 in 2014, bringing the jobless rate down to just under 14 per cent from its current level of 14.7 per cent.

The number of people at work in the Republic will increase to 1.849 million in 2014 from 1.842 million this year.

Mr Duffy and Mr Timoney say that the improvement is unlikely to spark a significant increase in consumers spending, a key part of any recovery.

Uncertainty
“Although it now seems that there will be some increase in earnings over the next two years, uncertainty regarding the economic outlook and the continued high level of unemployment is likely to result in households continuing to save for precautionary reasons,” they say, adding that consumers will continue to try to pay off debts.

Consumers are expected to save up to €5 billion from after-tax earnings of €87.8 billion this year and set aside €5.7 billion from earnings of €89.7 billion in 2014.

The ESRI’s forecasts are based on the assumption that the economies to which the Republic exports goods and services will either move out of recession or grow. The institute predicts that the US, which the report’s authors say has made a good start to the year, will grow by 2 per cent this year and 3 per cent in 2014.

Stabilise
The institute believes the recession in Europe will stabilise in 2013 before expanding by 1.1 per cent next year.

A number of independent economists questioned this following the publication of figures yesterday showing the EU remains in recession.

According to official figures released by the European Union’s statistic agency, Eurostat, GDP in the euro zone fell by 0.2 per cent, a weaker performance than had been expected.

© 2013 irishtimes.com

[Catmalojin]

Some good news today:

National Treasury Management Agency sells T-bills at record low yields
Updated: 12:51, Thursday, 16 May 2013

The National Treasury Management Agency has today completed an auction of Treasury Bills, selling the target amount of €500m.

The NTMA said that total bids received amounted to €1.822 billion - 3.6 times the amount on offer.

The three month bills were sold at an annualised interest rate, or yield, of 0.129% - the lowest level since the agency resumed auctions last July for the first time since the 2010 bailout.

That compares to a yield of 0.195% at the last such auction in April.

Commenting on today's auction, Danske Bank's Owen Callan, said the ''combination of increasingly positive investor sentiment towards Ireland, allied with the recent ECB rate cut and discussion over negative rates, continues to support Ireland’s short-term financing''.

Mr Owen said it now makes sense for the NTMA to begin looking at longer issuance of six-month and nine-month papers over the coming months.

''Although, the NTMA does not actually need any of this short-dated funding at this point, it would test out investor appetite,'' he added.

Story from RTÉ News:
http://www.rte.ie/news/business/2013...ury-bill-sale/

And some mixed news:

Trade surplus rises in March - CSO
Updated: 12:03, Thursday, 16 May 2013

New figures from the Central Statistics Office show that the value of exports decreased by €680m (8%) in March of this year compared to the same time last year to total €7.947 billion.

March saw a 9% fall in exports of medical and pharmaceutical products from the same month in 2012.

Machinery and transport equipment exports dropped by 15% and exports of petroleum and petroleum products slumped by 77%.

The value of imports also decreased by 17% to €4.129 billion, after an 85% drop in the imports of other transport equipment and a 37% decrease in medical and pharmaceutical products.

But on a seasonally adjusted basis, exports rose by 4% to €7.287 billion in March from February, while imports dropped 2% to €3.798 billion.

The CSO said that the seasonally adjusted trade surplus in March rose to €3.489 billion from €3.124 billion in February - an increase of 11%.

On an overall basis, the EU accounted for 57% of total exports, while the US was the main non-EU destination, accounting for 26% of total exports in March.

Two thirds of the value of imports came from the US, with one third coming from the UK, the CSO noted.

Story from RTÉ News:
http://www.rte.ie/news/business/2013...ports-imports/

[odlum833]

Negative interest rates at the next auction Safe haven yields.

[Black Cat]

Apple admit to cutting a secret deal in 1980 with Irish govt to enable it to dodge corporate taxes in the US (and elsethere?) - how much more of this is going on? Is Ireland a rogue state?

http://www.guardian.co.uk/technology...-corporate-tax

And a rebuttle from Ireland:

http://www.guardian.co.uk/business/2...-eamon-gilmore

[belfastuniguy]

It's very common. It's not illegal but becoming increasingly potent for people that have seen their wages fall and taxes rise.

[Dvblvnia]

The ISEQ is consolidating itself above 4,000 for the first time since 2008 which seems to bode well for the next 6-12 months in the Irish economy and people's pension funds.

[Catmalojin]

Govt to announce €7m science research investment
Updated: 07:48, Thursday, 23 May 2013


Projects will include the development of new cancer drugs and ways of detecting cognitive decline

Almost €7 million in funding for 62 early stage scientific research projects is to be announced by the Government.

The funding is being targeted at projects which may have a commercial benefit with further development.

The investment is being made as part of Science Foundation Ireland's Technology Innovation Development Award programme.

It is also being carried out in collaboration with Enterprise Ireland.

Details of the 62 projects to benefit will be outlined by Minister for Research and Innovation Sean Sherlock this morning.

It is understood the projects will include studies in the area of “Big Data” and the development of new drugs for cancer treatment.

Other projects include an examination of new ways of detecting cognitive decline and Alzheimer's disease, as well as the development of genetically modified crops that are tolerant to drought.

It is hoped the €6.9m will help research groups focus on the first stages of their applied research projects, which may ultimately yield a commercial benefit.

The programme also provides training in entrepreneurship to help the researchers identify market potential.

Story from RTÉ News:
http://www.rte.ie/news/2013/0523/452...ence-research/

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