Central Banks Forecasts Not So Grim

The lead headline in the Irish Times today must have depressed many: “Economy to shrink 11% over the next 18 months, says Central Bank.”  Things feel bad now, how bad would they feel if output fell by another 11% over the next 18 months.  Well, this is not at all what was forecasted by the Central Bank and their forecast is actually not that gloomy at all.

First, the bank’s forecast is that the average level of GDP in 2009 will be 8.3% lower than the average level of GDP in 2008, and then that the average level of GDP in 2010 will be 3% lower than in 2009.  The Bank did not release a forecast about what will happen over the next 18 months.

Second, while the Bank (like the ESRI) do not release quarterly assumptions underlying their forecast, one can back out roughly what they might look like.  Seasonally adjusted real GDP in 2009:Q1 is already 5.8% below last year’s average level.  So, if GDP was flat for the remaining three quarters of the year, then the Bank’s figure for the year average over year average for 2009 would be -5.8%.  One way to get their figure of -8.3% is to assume a decline of  -1.8% over each of the last three quarters of the year.

However, if that were to occur, then even a flat level of GDP in 2010 would produce a year average over year average figure for 2010 of -2.7%.  So, in fact, rather than an 11% decline over the next 18 months, the banks figures are actually consistent with a decline in GDP from the end of June to December this year of 3.6%, followed by a very small decline in the first quarter of 2010 and flat GDP after. A more likely scenario that would produce the Central Bank’s forecasted outcome would see a larger fall in 2010:Q1 and perhaps 2010:Q2 followed by a recovery in the subsequent quarters.  In light of the severe fiscal contraction being inflicted on the economy over this period, this would not represent such a bad outcome.

Beyond the question of what the Central Bank forecast actually implies, there is the more general issue, which I have referred to before, of the difficulty in mapping forecasts based on year-average over year-average into commentary about what is actually happening now in the economy.

Rossa White of Davy’s has also written on this issue.  See here.

13 thoughts on “Central Banks Forecasts Not So Grim”

  1. This Central Bank Report doesn’t inspire a lot of confidence because, although published yesterday (July 14), it is still quoting figures for growth
    in 2008 that are pre- the CSO revisions published a fortnight ago (June 30). For example, the Report quotes a figure of 7.5% for the y-o-y fall in GDP in 2008 Q4. But, on 30 June the CSO revised it to a fall of 5.4%. Given how much they earn, you’d think the Central Bank would try to be a bit more up-to-date.

    Nevertheless, what is interesting is that in the past month all organisations that have published forecasts in that time have revised down the predicted fall in GDP in Ireland in 2009. Until a month ago, most forecasts for the fall in GDP in 2009 were in the range 8% to 9.5%. But, in the past month they have all been in the range 7% to 8.5%. Last week NIB and BOI both published forecasts of a 7% fall in GDP in 2009.

    At the same time, forecasts for the fall in GDP in EU countries have been revised up in recent months. In early 2009, it was being predicted by almost everyone that the fall in GDP in Ireland would be in the range 8% to 10%. Morgan Kelly predicted 20%. At the same time, it was being predicted that the fall in GDP in the EU would be in the range 2% to 3%. That left a gap of 6% to 7%. But, that gap has now been reduced to 2% to 3.5%, because the most recent forecasts are now for a fall of 5% in GDP in the EU and, as I say, 7% to 8.5% in Ireland.

    The reason why the gap has been closing is because, as I have repeatedly pointed out, Ireland’s exports are performing far better than expected and far better than in any other EU country. So far in 2009, they are down about 2% against their 2008 average, compared with 15% to 20% in almost all other EU countries. This is slowly being reflected in GDP forecasts.

    I think there is a reasonable chance that the fall in GDP in Ireland in 2009 will be a lot less than even the more optimistic recent forecasts. I have a bet of 500 euros (placed in April at odds of 10 to 1) that the fall in GDP in Ireland in 2009 will be less than the EU15 average. I’m not totally confident of this, but at odds of 10 to 1, I think its a good bet. I could have got 30 to 1 at Christmas.

    It is clear that the forecast falls in exports from Ireland contained in all the GDP forecasts are likely to prove far too pessimistic. The IMF and OECD both forecast that Ireland’s exports would fall 10% in volume in 2009. Many of the forecasts from within Ireland were for similar. The IEA forecast a 13% fall in the volume of exports. ESRI’s forecast was for a somewhat smaller fall. But, so far in 2009 the fall in the volume of exports has been far less than the most optimistic forecast.

    It is a simple matter of arithmetic, therefore, that for the current forecasts of a fall in GDP of 7% to 8.5% to come true, there will have to be a larger-than-forecast fall in private consumption and/or investment to cancel out the effect on GDP of the much-smaller-than forecast fall in the volume of exports. That might happen, I can’t be in any way certain. But, if it doesn’t, I may be on to a winner in my bet.

  2. @john

    Interesting points. This may be a dumb question but is there any chance that we are being/have been given forecasts that may be worse than the likely reality…… because it might look better later (for politicians)?

    Based on these more optimistic forecasts then, when are we likely to see 3 straight months of unemployment not growing?

  3. @joseph

    I couldn’t answer your question on unemployment. There is usually a time-lag of at least a year between the resumption of economic growth and the resumption of employment growth. Neither Ireland nor any other country in the EU appears to have resumed even economic growth yet.

    As to whether we are being/have been given forecasts that may be worse than the likely reality, I don’t think there is any conspiracy to do that on the part of government (or other) politicians from the point of view of making themselves look better in a year’s time, if things turn out less bad than they predicted. I might be wrong, but I can’t see how that would work.

    But, I do think we have been given over-pessimistic forecasts on the performance of manufacturing and exports, both by government politicians and advisors and organisations involved in those fields. The objective isn’t political so much as to encourage (shall we say) the population to believe in the necessity of wage (and other) cuts. In May, the Irish Exporters Association forecast a 13% fall in export volume in 2009, and accompanied this forecast with calls for cuts in wages to rectify the situation. But, barring a new collapse in global trade in 2009 H2, the actual fall in export volume in 2009 will be a tiny fraction of this (so far in 2009, its only 2%, compared with 20% in other EU countries).

    The key element isn’t just the fall in Ireland’s GDP in 2009, but how bad it is relative to other EU countries. As shown, there has only been a small (1% or so) downward revision in the latest forecasts for the fall in GDP in Ireland. But, because the fall in other countries has been revised up, the gap between the forecast falls in GDP in Ireland and other EU countries has now been cut by more than half. If Ireland ends 2009 with a fall in GDP that is only marginally greater than that in other EU countries, the case for across-the-board wage cuts in Ireland becomes much less. I doubt if the government or certain organisations want that.

  4. “If Ireland ends 2009 with a fall in GDP that is only marginally greater than that in other EU countries, the case for across-the-board wage cuts in Ireland becomes much less. I doubt if the government or certain organisations want that.”

    Sounds like nonsense…… sure didn’t I post some charts here showing we were the most indebted country in the world, to be told thats because of a few naughty boys in the IFSC borrowing but that didn’t affect us. If debt figures and ratios to GDP are worthless then comparing transfer pricing exports and GDP mustn’t reflect the real state either…

    Hopefully our exports will hold up, Intel posted good results… But ye cant expect the boys at Intel etc to carry the country….

    Revenue a somewhere in the 30B’s, spend around 60B…. . If anyone can explain why that isn’t a serious problem requiring immediate attention, because exporters aren’t losing revenue as quickly as some feared, fire ahead

  5. @john

    Thanks – good answer. I’m sure the wage-cutting class will get away with it though. They used to just steal land a couple of centuries or more ago and leave people starving. The equivalent today is injecting fear, cutting wages/rights and raising taxes on the average PAYE guy and girl. It’s all still about the powerful abusing that power and getting away with it….. or violently crushing the masses when they do object.

    @Garry

    …. and I presume the bill for that debt will be picked up by the people that have had ‘the land stolen from them’?

  6. The pattern of the predicted fall in Ireland’s GDP in 2009 being gradually whittled down, while being raised in most other EU countries, has continued with the publication of the latest ESRI forecasts today. In April, ESRI forcast a fall in GDP in Ireland in 2009 of 8.3%. Today, they have revised that down to 7.9%. Back in April, most forecasts for the fall in GDP in the EU15 were around 3%. Today, they are 5%.

    The best way to think of these forecasts is to compare them with opinion polls in the year before an election. They are not exact science and have considerable margins of error. I’d compare the economic forecasts for Ireland relative to the EU15 with opinion polls that put one party 6% or 7% behind early in the year, but by mid-summer had narrowed the gap to 2% or 3%, close to the margin of error. In other words, everything to play for.

    Comparing the ESRI April forecasts with their forecasts published today, we get the following for each component of GDP:

    private consumption: (April forecast: -7.0% , July forecast -7.0%)
    public consumption: (April forecast: -0.4% , July forecast -0.0%)
    investment: (April forecast: -31.2% , July forecast -30.5%)
    exports: (April forecast: -5.0% , July forecast -3.9%)
    imports: (April forecast: -9.3% , July forecast -8.6%)

    So, most of the reduction in the predicted fall in GDP is accounted for by a reduction in the predicted fall in the volume of exports.

    Comparing the latest forecast with what we now know actually happened in 2009 Q1, the forecasts for consumption and investment are in line with what actually happened. But, both exports and net exports performed significantly better in 2009 Q1 than ESRI forecast for 2009 as a whole. That doesn’t mean the forecast is wrong, simply that both exports and net exports will have to perform less well in 2009 Q2, Q3 and Q4 than in 2009 Q1 for the ESRI forecast for 2009 as a whole to prove accurate. Who can possibly know if this will happen? Based on the latest PMIs and the Fed’s forecast last night for US growth, I’d be somewhat suprised if Q1 turned out to be Ireland’s best-performing quarter for exports in 2009. But, its impossible to ever know these things for sure, so I won’t quibble with the ESRI forecast at this stage.

  7. Taking up Karl Whelan’s point about trying to extrapolate quarterly figures from the whole-year forecasts published by the Central Bank and ESRI, I’ve done some further number crunching on today’s ESRI forecasts, comparing the ESRI forecasts for 2009 as a whole with what we now know (from CSO figures) actually did occur in 2009 Q1. I’ve calculated what would happen in 2009 as a whole if all the components of GDP remained the same (seasonally-adjusted) in 2009 Q2, Q3 and Q4 as they were in 2009 Q1, and matched them with what ESRI forecast:

    private consumption: (ESRI: -7.0% , actual in Q1 extrapolated: -7.5%)
    public consumption: (ESRI: -0.0% , actual in Q1 extrapolated: +0.9%)
    investment (ESRI: -30.5% , actual in Q1 extrapolated: -26.7%)
    exports: (ESRI: -3.9% , actual in Q1 extrapolated: -2.1%)
    imports: (ESRI: -8.6% , actual in Q1 extrapolated: -8.3%)
    GDP: (ESRI: -7.9% , actual in Q1 extrapolated: -5.8%)

    So, what this means is that ESRI are forecasting quarterly falls in GDP of about 1.3% for the rest of 2009. No surprise there. But, what is a surprise is the composition of the falls.

    ESRI are forcasting hardly any change in total consumption for the rest of 2009 as compared with 2009 Q1, with a small fall in investment being almost cancelled out by a small increase in private consumption. To repeat, these aren’t my forecasts, I’m simply doing a quarterly statistical extrapolation from the ESRI whole-year forecasts.

    According to ESRI, the fall in GDP in the remainder of 2009 will result mainly from a fall in the volume of exports in 2009 Q2, Q3 and Q4 as compared with 2009 Q1. From my extrapolation, I calculate that ESRI are forecasting a quarterly fall in the volume of exports of 1.2% for the rest of 2009.

    I’m certainly not saying this won’t happen. I have no idea, and only Mystic Meg knows for sure. But, it would be surprising given that (a) global trade is picking up in 2009 H2 and (b) the Euro has fallen against sterling by 10% since 2009 Q1. The only figures published by the CSO beyond 2009 Q1 were merchandise exports for April, and these showed a big rise. So, who knows?

    IF the ESRI forecasts for consumption and investment were to prove accurate, and IF exports were to maintain their 2009 Q1 volumes for the rest of 2009, rather than falling as ESRI forecast, then the fall in GDP in 2009 would be down to 6%. I’m not predicting that will happen (note that there are two IFs in my sentence), but it has to be a possibility.

    IF the ESRI forecasts for consumption and investment were to prove accurate, and IF exports were actually to rise 1.2% quarterly for the rest of 2009, then the recession would allready be over (again, please note the two IFs – its a conditional statement, not a prediction).

  8. Working in a slightly different way, I computed a quarterly GDP series consistent with the ESRI’s forecasts published today. (Like Karl W I am using GDP since the quarterly fluctuations in the timing of profit outflows seem arbitrary). Here is the plot.

    Two points worth noting:

    (i) Peak-to-trough fall in quarterly GDP is 16.3 per cent. (Peak is the last quarter of 2007, trough on these figures is early 2010 — though I share Karl’s view that a later trough may be more plausible).

    (ii) The relative scale of Ireland’s total output loss compared with other EU countries depends not only on the peak-to-trough decline, but on the duration and timepath of the dip below trend.

  9. “In April, ESRI forcast a fall in GDP in Ireland in 2009 of 8.3%. Today, they have revised that down to 7.9%.”

    Message to that half million facing the dole – cheer up.

    And, hey, you – fella who was told he was thrown out of an eight-floor window – not to worry, son, we’ve revised our figures. You’re merely plummetting from the seventh floor.

  10. For anyone interested in analysing how Ireland is performing during the current global recession and how this performance fits in with its pre-recession performance since 2000, to give an overall picture for the first decade of this century, I have compiled a number of Tables, all derived from Eurostat.

    Table 1: this shows the falls in GDP between the pre-recession peak quarter (2007 Q4) and the latest quarter (2009 Q1)

    Table 2: this shows the increases in GDP between 1999 Q4 and the pre-recession peak quarter (2007 Q4) – i.e. this decade up to the pre-recession peak quarter

    Table 3: this shows the increases in GDP between 1999 Q4 and the latest quarter (2009 Q1) – i.e. this decade up to the latest quarter

    Table 4: this shows the falls in GDP in the latest quarter (between 2008 Q4 and 2009 Q1)

    Table 5: this shows the percentage of this decade’s pre-recession growth lost so far in the recession (i.e. the percentage of GDP growth between 1999 Q4 and 2007 Q4 that was lost between 2007 Q4 and 2009 Q1)

    Table 6: this shows how far back in time the growth lost corresponds to (i.e. the most recent previous quarter when GDP was lower than in 2009 Q1)

    Table 7: this shows the increases in the volume of manufacturing output between 1999 Q4 and the latest quarter (2009 Q1)

    Table 8: this shows the increases in the volume of exports between 1999 Q4 and the latest quarter (2009 Q1)

    The conclusions I draw from it are as follows:

    (a) Relative to other EU countries, the fall in GDP in Ireland since the start of the recession is only a tiny proportion of the rise in GDP in Ireland between the start of the decade and the start of the recession. Since 2007 Q4, GDP in Ireland is down 9.3%, compared to 4.2% for the EU15. So, we have lost about 5% relative to the EU15. However, between the start of the decade and and 2007 Q4, GDP in Ireland increased by 55.2%, compared to 18.3% for the EU15. So, in that we period we gained about 37% relative to the EU15. We’ve lost only about one-eighth of that pre-recession relative growth during the recession. As a result, during this decade up to the most recent quarter (2009 Q1), which encompasses the recession in Ireland, our cumulative growth is 3 times that of the EU15 and the highest in the EU15. Between the start of the decade and and 2009 Q1, GDP in Ireland increased by 40.7%, compared to 13.4% for the EU15. Both figures are obviously lower than those up to 2007 Q4, but the ratio of Ireland’s GDP growth to EU15 growth has hardly changed (its still 3 times higher in Ireland, almost exactly the same as it was up to 2007 Q4).

    To my mind, this disproves the theory that all the growth this decade has been fluff, having no substance and merely attributable to building houses and property speculation. David mcWilliams and Morgan Kelly are the main proponents of this theory. But, if it were true, then given the complete collapse in housebuilding and property speculation between 2007 Q4 and 2009 Q1, why has so little of the pre-recession growth been lost? Even in 2009 Q1, a quarter when hardly any houses were built and the property market was as dead as Michael Jackson, our cumulative GDP growth since the start of the decade was 3 times that of the EU15 (40.7% v 13.4%).

    See Tables 1 to 3 for this.

    (b) The collapse in housebuilding did indeed drag Ireland’s growth rate below the EU15 average for a period. That lasted from 2007 Q4 to 2008 Q4. During this period the collapse in housebuilding in Ireland knocked 5% to 6% off GDP. But, by 2009 Q1, the effect was diminishing, largely because housebuilding was by this time so low, it had hardly any more to fall. At the same time, by 2009 Q1 the global manufacturing and export meltdown was in full swing. As I have posted in other threads, Ireland is coming through this manufacturing and export meltdown extremely well. Our manufacturing and exports, although they have fallen, have fallen less than in any other EU country. The result is that by 2009 Q1, Ireland’s GDP was once again growing faster (or, to be precise, falling less fast – which, in relative terms amounts to the same thing) than the EU15 average, a resumption of what it had done almost continuously between 1986 and 2007. In 2009 Q1, Ireland’s GDP fell by 1.5%, compared to 2.5% for the EU15. Based on allready-published figures for manufacturing and exports, there is a very good chance that Ireland will again outperform the EU15 in 2009 Q2. The period of underperforming the EU15 appears to be over. It lasted one year, from 2007 Q4 to 2008 Q4.

    See Table 4 for this.

    (c) Looking at how much of the pre-recession growth (since the start of the decade) has been lost in Ireland during the recession, and comparing it with other EU15 countries, it is clear that most other EU15 countries have lost a far larger proportion. This is because their falls in GDP during the recession are not that much less than in Ireland but, because their pre-recession growth was so low compared to Ireland, the proportion lost is much higher. So, since 2007 Q4, Ireland has lost about one-sixth of its growth this decade up to 2007 Q4. But, Germany and Italy have lost over half, Denmark and Portugal one-third, and most other EU15 countries one-quarter.

    See Table 5 for this.

    Likewise, if we scan back in time to see when was the most recent quarter previously when GDP was lower than in 2009 Q1, for Ireland its 2005 Q4. Our GDP in 2009 Q1 had fallen back to its 2005 Q4 level. But, nearly every EU15 country is in the same boat, and some are worse. Germany, Sweden and the U. Kingdom are also back to 2005 Q4, Denmark and Portugal are back to 2005 Q3 and Italy is back to 2003 Q2. The EU15 as a whole is back to 2006 Q1, just one quarter further on than Ireland.

    See Table 6 for this.

    (d) As I said above, the far higher GDP growth in Ireland, between the start of the decade and 2009 Q1, can not possibly be attributed to housebuilding or property speculation because in that quarter they were both totally collapsed and far below their levels at the start of the decade. They were actually a major drag on the cumulative growth between the start of the decade and 2009 Q1, not the main cause of it. So, we need to look elsewhere to see why GDP growth in Ireland between the start of the decade and 2009 Q1 was so much higher than in other countries.

    Tables 7 and 8 provide the answer.

    Between the start of the decade and 2009 Q1 both manufacturing output and exports increased in volume in Ireland by far more than in any other EU15 country. In fact, in the majority of EU15 countries, manufacturing output was actually lower in 2009 Q1 than at the start of the decade, in many of them more than 10% lower. In contrast, between the start of the decade and 2009 Q1, manufacturing output in Ireland increased by 54.2%. The EU15 average was a fall of 3.2%. There is a similar pattern for exports, although not quite as stark. Between the start of the decade and 2009 Q1, the volume of exports from Ireland increased by 59.7%, the highest in the EU15 and twice the EU15 average of 29.1%. This hardly fits in with the theory that manufacturing and exports have been performing badly this decade. It is because of this much superior manufacturing and export performance that, now the drag on growth from falling construction output is dimishing (if only because it can’t go much lower), our overall GDP growth rate has once again (since 2009 Q1) started to outperform the EU15 average.

    See Tables 7 and 8 for this.

    Table 1: change in GDP between 2007 Q4 and 2009 Q1

    [ 1] Greece +1.2%
    [ 2] Austria -2.2%
    [ 3] Spain -2.6%
    [ 4] Belgium -2.7%
    [ 5] France -2.8%
    [ 6] Netherlands -3.5%
    [ 7] Portugal -3.6%
    [ *] EU15 -4.2%
    [ 8] U. Kingdom -4.2%
    [ 9] Denmark -4.7%
    [10] Finland -5.2%
    [11] Germany -5.5%
    [12] Italy -5.5%
    [13] Sweden -6.0%
    [14] Luxembourg -6.4%
    [15] IRELAND -9.3%

    Table 2: change in GDP between 1999 Q4 and 2007 Q4:

    [ 1] IRELAND +55.2%
    [ 2] Luxembourg +45.5%
    [ 3] Greece +36.5%
    [ 4] Spain +31.6%
    [ 5] Finland +29.0%
    [ 6] Sweden +25.5%
    [ 7] U. Kingdom +23.0%
    [ 8] Austria +19.5%
    [ 9] Netherlands +18.7%
    [ *] EU15 +18.3%
    [10] Belgium +17.8%
    [11] France +16.9%
    [12] Denmark +14.5%
    [13] Germany +11.8%
    [14] Portugal +11.4%
    [15] Italy +10.5%

    Table 3: change in GDP between 1999 Q4 and 2009 Q1:

    [ 1] IRELAND +40.7%
    [ 2] Greece +38.1%
    [ 3] Luxembourg +36.2%
    [ 4] Spain +28.2%
    [ 5] Finland +22.2%
    [ 6] Austria +16.8%
    [ *] EU15 +13.4%
    [ 7] Sweden +17.9%
    [ 8] U. Kingdom +17.9%
    [ 9] Belgium +14.6%
    [10] Netherlands +14.6%
    [11] France +13.6%
    [12] Denmark +9.0%
    [13] Portugal +7.5%
    [14] Germany +5.6%
    [15] Italy +4.4%

    Table 4: change in GDP between 2008 Q4 and 2009 Q1

    [ 1] Sweden -0.9%
    [ 2] Denmark -1.1%
    [ 3] Greece -1.1%
    [ 4] France -1.2%
    [ 5] IRELAND -1.5%
    [ 6] Luxembourg -1.5%
    [ 7] Portugal -1.6%
    [ 8] Belgium -1.7%
    [ 9] Spain -1.9%
    [10] U. Kingdom -2.4%
    [ *] EU15 -2.5%
    [11] Austria -2.6%
    [12] Italy -2.6%
    [13] Netherlands -2.6%
    [14] Finland -2.7%
    [15] Germany -3.8%

    Table 5: percentage of pre-recession growth lost in recession

    [ 1] Greece 3.3%
    [ 2] Spain 9.8%
    [ 3] Luxembourg 14.1%
    [ 4] Austria 15.4%
    [ 5] IRELAND 16.8%
    [ 6] France 18.9%
    [ 7] Belgium 19.1%
    [ 8] Finland 20.7%
    [ 9] U. Kingdom 21.3%
    [10] Netherlands 22.5%
    [11] Sweden 25.1%
    [ *] EU15 26.8%
    [12] Denmark 32.4%
    [13] Portugal 34.2%
    [14] Germany 54.5%
    [15] Italy 57.1%

    Table 6: most recent previous quarter when GDP lower than in 2009 Q1

    [ 1] Greece 2008 Q1
    [ 2] Austria 2006 Q4
    [ 3] Netherlands 2006 Q4
    [ 4] Spain 2006 Q4
    [ 5] Belgium 2006 Q3
    [ 6] Finland 2006 Q2
    [ 7] Luxembourg 2006 Q2
    [ 8] France 2006 Q1
    [ *] EU15 2006 Q1
    [ 9] IRELAND 2005 Q4
    [10] Germany 2005 Q4
    [11] Sweden 2005 Q4
    [12] U. Kingdom 2005 Q4
    [13] Denmark 2005 Q3
    [14] Portugal 2005 Q3
    [15] Italy 2003 Q2

    Table 7: change in manufacturing output between 1999 Q4 and 2009 Q1

    [ 1] IRELAND +54.2%
    [ 2] Austria +22.0%
    [ 3] Finland +8.1%
    [ 4] Germany +2.2%
    [ 5] Netherlands +2.2%
    [ 6] Sweden +1.1%
    [ 7] Belgium -2.1%
    [ *] EU15 -3.3%
    [ 8] Denmark -3.5%
    [ 9] Greece -8.7%
    [10] Luxembourg -10.9%
    [11] U. Kingdom -11.0%
    [12] Portugal -14.0%
    [13] France -14.1%
    [14] Spain -15.9%
    [15] Italy -18.5%

    Table 8: change in volume of exports between 1999 Q4 and 2009 Q1

    [ 1] IRELAND +59.7%
    [ 2] Germany +54.5%
    [ 3] Austria +53.6%
    [ 4] Luxembourg +52.8%
    [ 5] Denmark +38.7%
    [ 6] Sweden +37.8%
    [ 7] Netherlands +37.4%
    [ 8] Finland +33.9%
    [ ] EU15 +29.1%
    [ 9] U. Kingdom +23.7%
    [10] Portugal +15.9%
    [11] France +14.8%
    [12] Spain +14.8%
    [13] Greece +13.6%
    [14] Belgium +11.8%
    [15] Italy -2.1%

  11. Why is there such almost obsessive interest in exports?
    If Ireland were merely a shipping centre, woukld there be much point in measuring trade flow?

    It is the element of retained value, not added value and certainly not gross flow that counts and I see no measure of this, nor do I think it possible, nor desirable.

    The paramount industrial and corporate tax policies are still successful and due to the credit crunch are likely only to increase. But what of the crumbs from the table? The rent profits we have earned from our welcome tenants? We have invested them in excess income which we wasted in false housing and land values, foreign purchases and wages for immigrants but also spme went into R&D and education. This should continue, but the excess income should not. The best way to do this is to follow the Norwegian example of taking some extra tax and investing carefully. Given the indebtedness arising, the best investment for the next five years at least will be paying off the debt.

    I think the idea that taxation is too high has to be examined carefully.

    The policy of softening up the mob by screaming that the economy is destroyed is actually now apprpriate given the waste of a decade or more of past rent from these successful activities. It would be a shame to waste a good crisis. We need higher taxes. Imposing cuts is a purely political exercise but the need for state control is an economic necessity, given the gross immaturity of the Irish capitalist class.

  12. @Pat
    “Imposing cuts is a purely political exercise but the need for state control is an economic necessity, given the gross immaturity of the Irish capitalist class.”

    Our political class hasn’t had too great a record either.

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