Central Bank Quarterly Bulletin

The new Central Bank Quarterly Bulletin is available here.  In addition to the new economic forecasts, the Bulletin carries some very interesting special articles on:

  • Large-Value Payment System Design and Risk Management
  • Firms’ Financing During the Crisis: A Regional Analysis
  • Irish Money and Banking Statistics: A New Approach

37 replies on “Central Bank Quarterly Bulletin”

So this downgrade to growth forecasts for 2011 …. does that mean that FF’s 4 year plan is a load of horlicks then?

A “significant downward revision” they are calling it. It was only…. 2 or 3 months ago we were given this forecast and they are already revising it?


There is a very interesting graph on Page 46 (of the printed rather than pdf edition) which shows the wealth destruction that has occured since the peak of the property market.

According to the CB, Irish net wealth had dropped by 28% (or by €175b) from Q6 2006 to end Q2 2010. This figure is based on a property price drop of of 27% over that period.

If instead of a 28% property price drop one assumes a 50% price drop (more realistic I would think) the overall wealth drop from peak rises to 46% or €295b. That is close to 2.5x GNP. That is enormous. And property prices drops and resulting wealth destruction continue.

It is my view that this collosal wealth destruction – rather than economic uncertainty – is the key reason for the sharp rise in Ireland’s savings rate as citizens respond rationally to the threat of a pauperised old age by cutting current consumption and increasing savings for the future.

In other words, a boost in consumption levels driven by a reduction in the savings rate may therefore be much further away than most analysts expect.

Wait! Wait! You’re getting it all wrong! FIRST I draw the pentagram, THEN you do the invocation.


So I guess the sensible thing to do is continue with this economic model as long as our politicians can make some soothing management speak noises in a quiet knowing manner – ala Michael Martin like.

I prefer the pure unadulterated gibberish from Cowen – it expressed our predicament in a much more sensible manner

Page 48–Am I reading this correctly? €643 million per month being taken out of pockets of consumers to pay down loans of various kinds?

“The majority of Irish households’ financial
liabilities comprise loans advanced by resident
credit institutions. Lending to Irish households
by these institutions remained on a downward
trajectory in recent months. The annual rate of
change in loans advanced to households was
minus 4.8 per cent in November 2010, and
averaged minus 3.7 per cent in the first eleven
months of 2010. The monthly net flow of
household loans averaged minus €643 million
during this period. By contrast, in the euro area
overall, household loans increased by 2.7 per cent
in November, and by an average rate of 2.5 per cent
in the period January to November 2010.”

How can any economy survive this rate of deleveraging? McWilliams is right. The banks have been turned into debt collection agencies for bondholders. Regretably, the debts they really should be collecting were handed over to NAMA to collect. I doubt that NAMA is pulling in 643 million per month or even a tenth of that figure.

@Cormac Lucey

Very true. Land prices have fallen back from their heights in 06/07 by more than 50%, but still overvalued relative to the return per hectare.

I was in conversation with a man recently that usually buys 300 weanlings every year for overwintering and ‘bringing on’. In 2006 he was ‘lucky’ enough to secure a loan of €6 million for a bit of property speculation (sorry ‘development’). Now he’s bankrupt.

@ the alchemist

…and it was Irish banks who decided to lend him that money, not French or German.

I really don’t know why people waste time on these sorts of forecasts. Economics is the only field where the media pays more attention to what ‘experts’ forecast than to what actually happens. You don’t read the sports pages on a Monday morning and find that the lead story is Eamonn Dunphy’s latest Premiership forecasts, with the results of the actual matches played over the weekend being relegated to a small paragraph inside. That is what happens in economics.

For the record, the corresponding Central Bank forecasts published this time last year turned out to be not worth the paper they were printed on. I said so at the time. These are the Central Bank forecasts for 2010 published (a) in January 2010 and (b) January 2011:

volume of exports: (a) +1.4% (b) +8.4%

volume of manufacturing output (a) +0.6% (b) +6.7%

value of agricultural output: (a) +4.1% (b) +16.3%

In other words, they failed to forecast at the start of 2010 the exports growth, manufacturing growth and agricultural growth that actually occurred in 2010. Yet, we are asked to believe that the corresponding forecasts now being made for 2011 are of some value. They are not.


What was the CB unemployment forecast in 2010 and how did that forecast turn out? In numbers and %?.

So….everythings growing: ” exports growth, manufacturing growth and agricultural growth”
Q : why then is the domestic economy NOT growing? Answers on an electron please.

Just out from Finfacts (link below, as no doubt some will say I made it up):

Irish manufacturing posted sharpest rise in output in January since 2000.


That is actually the first piece of economic data for 2011 to be published.
It looks like the Central Bank are off to a good start with their forecasts for 2011, and at this stage are on target to beat their own world record forecasting errors set in 2010. As I said, it would be better if economists in Ireland paid more attention to data relating to what actually happens, rather to forecasts. There are very few threads on this site that relate to the former, but the latest forecasts, from whatever organisation, nearly always get a thread, even when the corresponding forecasts from the same people the previous year proved totally wrong (eg the thread on ESRI’s emigration forecasts a couple of weeks ago, and now these Central bank forecasts).

It’s hardly surprising Irish manufacturers have been able to expand output so much, given how they have been able to trim their costs so brutally in recent years. Mass lay offs and wage cuts are the parents of this particular statistic.

JTO is up to the usual tricks – quoting statistics selectively.

Agriculture and industry account for only one third of GDP.

Well JTO, what is happening in the other two thirds, how well are you forecasting that, and yeah how about unemployment, employment and migration??? Can you make your labour market forecasts add up with the underlying demographics?

A export boom via multinationals gaming the numbers and agriculture doing well because of a global food crisis – is not really something to rejoice about.
Anyway these activities will only sustain the illusion of growth – there function is to pay off interest on unrepayable debt.
If we were under a Gold standard there would be net inflow of capital – however the world is under a corruption standard where the lords of finance can do as they wish whatever the underlying basis of the economy.

A country with such a huge export surplus without internal capital growth is a colony pure and simple – although we should rejoice that we are fortunate in the ability to feed ourselfs – lets hope we do not have to export too much food to pay off debt and therefore starve our “citizens” as happened during WWII and the Famine.


Astute on Governance and Boards in SMEs ………. key link to competitiveness and growing small firms ……….. we could learn a lot from the Germans, Danes and Dutch here ……. and on the role of Banks ….

On Financial system – Mr Elderfield has done some very valuable work on Corporate Governance – lot more to do on implementation ……… a firm debunking of the toxic Pee-Dee/McGreevy_Ahearn ideology on soft regulation ……… [prominent PD silken commentators are in as nauseating a denial as the Bowl Bertie ………

On state boards and QUANGOS – packed with political cronies, who generally know f3ck all about the core mission of the entity but who are ‘loyal party disciples’ ………….. This area of Irish Corporate Governance remains a DISASTER ……….. and is costing a fortune that we cannot any longer afford ……………….. someone should probably just give Kutz McCarthy carte blance and a couple of Sherman tanks and let him get on with it ……. for those that remain, appointments by an independent group including outsiders …… we simply cannot afford Crony Governance any longer anywhere in this society ………

@The Governor

Hope you are not finding all this daily empirical support for your prior academic work too stressful …….

Blind Biddy wants to know if you still take ould five pound notes? She found a biscuit tin packed with em in the attic when she went looking again for her bazooka after the FF front bench was announced …

@Joseph Ryan, Brian Lucey, Scorpio

You are all missing the point. My point is that the Central Bank made forecasts for all these sectors this time last year and the forecasts turned out to be totally wrong. Ergo, their forecasts for the same sectors this year are of no value and certainly do not warrant a thread for discussion on such a distinguished site as this.

@Scorpio & JtO

JtO is making a reasonable point. Discussion based on actual figures rather than forecasts is more useful, particularly if, as he claims, the forecaster has been shown to be significantly out in the past.

I seem to remember – help required – that the Guardian and perhaps the Independent used to run an annual UK economic forecast competition across a range of indicators, and give a prize to the most accurate. Punters could play. It turned out that of the official forecasters none of them were more accurate than the statement “things will be the same next year as they are now”. I’ve had a quick look in the Guardian archives but can’t see the outcomes. Jog anyone’s memory?

So the answer to ‘what do you think of these figures’, being ‘I think nothing of them as I have no reason to suppose they are accurate’, seems pretty straight to me.

@ Gavin

The bloomberg columnist John Dorfman runs a competition like that every year. Around september i think.

No-one has refered to the reason for the downgrade. It wasn’t a capricious change of heart. Here is what the Bulletin says,

“These projections represent a significant downward revision to those published in the last Quarterly Bulletin, which were compiled on the basis of a much smaller €3bn fiscal consolidation in 2011 than the one currently budgeted, and on the basis of continued market access to funding on reasobale terms”.

@Gavin Kostick – yes we can discuss actual outcomes but this discussion is about forecasts. If you had forecast in early 2008 that everything is going to be as it was you would be way out (and some were!!). The problem with forecasting is obvious – nobody knows the future.

The big problem with JTO’s forecasts is that he does not produce a full consistent set. If he can produce a consistent full set of forecasts that is always better than that of others he could make a lot of money. Of course JTO always ducks the tough questions (still no answer from him).

As Michael Burke notes, the revision in the forecasts does not come out of nowhere. Unless you think that the much harsher budget has no effect then surely a downward revision makes a lot of sense.


The big problem with JTO’s forecasts is that he does not produce a full consistent set. If he can produce a consistent full set of forecasts that is always better than that of others he could make a lot of money.

JTO again:

I am not in the business of making economic forecasts. I am currently making quite a lot of money in the totally different business that I am actually in. There are 40 economists employed full-time in the Central Bank making economic forecasts. I am not saying that, were I to enter the business of economic forecasting, I could do better. My point is that economic forecasting is inherently flawed and, consequently, does not merit the attention it receives, certainly not to the point of opening a thread here everytime A, B or C publishes forecasts. It has little scientific basis and is little more than guessing. I’d rate horse race tipping or football forecasting a far more scientific business than economic forecasting. Therefore, that being the case, my argument is that economic analysis, discussion and debate should be far more focused on actual data for what is occurring or has occurred rather than on the latest forecasts/guesses from A, B or C for what they think will occur, which, based on past experience, most likely will not.

@JTO “My point is that economic forecasting is inherently flawed and, consequently, does not merit the attention it receives, certainly not to the point of opening a thread here everytime A, B or C publishes forecasts.” – fair enough, can we have less of your forecasts then?

@JTO – by the way if you go back up to the initial post you will see that Philip drew attention to the special articles.


by the way if you go back up to the initial post you will see that Philip drew attention to the special articles.

JTO again:

That is a fair point. I accept it. I am not in any way criticising Philip Lane. But, nearly all the posts that followed related to the CB forecasts. So, I intervened with my post pointing out that the corresponding CB forecasts made a year ago proved totally wrong.

More generally, a wealth of actual data is published at the start of each month. There is tons of it this week and all the more significant because this week’s data will be the first for 2011. I am certainly not saying that there should be a thread on every item of data published, merely that, as a general rule, there should be more focus on actual data rather than on forecasts. So far, nearly all the actual data published this week has been reasonably good, among them: (a) manufacturing PMI at 11-year high in January (b) new car sales up 29% in January (c) just published a few minutes ago, live register down 6,900 in January (probably a bit freakish as a result of snow in December).

@JTO – I agree that actual data is more worthy of discussion than cristal ball gazing, but one has to be careful as there is a lot of volatiltity and a lot of data. For any good data point I could probably find a negative one (just spotted robberies up over 35%!). What matters is the overall picture – it might not be as bad as it seems but it sure is not good.


For any good data point I could probably find a negative one (just spotted robberies up over 35%!).

JTO again:

You have neatly illustrated my central point. You have used an actual and accurate figure for the number of robberies (published yesterday by the CSO). This tells us factually what the trend is in relation to robberies (just out of interest, the figures for other crimes showed a fall, but leave that aside). The point is that you have used a figure just published for something that has actually occurred. It is not a forecast, but a fact. If this were a blog relating to crime levels, there could be a meaningful discussion on that fact. But, on such a blog, you wouldn’t have discussion on some group of solicitors’ forecasts for the numbers of crimes that might be committed each year up until 2015, especially if the same group of solicitors’ forecasts had proved wrong in previous years. It is only in the field of economics that forecasts get more attention than facts.

The 6,900 fall in the Live Register must be some kind of record, mustn’t it? I remember when the Live Register fell about 4,400 towards the end of last year that that was one of the biggest falls on record. As a result of that, this must be one of, if not the biggest fall in numbers on the Live Register.

Apparently the number of redundancies notified to the Dept of Enterprise and Employment also fell by 26% in Jan 11 compared to Jan 10. Hopefully this continues throughout the year and we get the jobs market back to growth.


Real numbers please!!

The live register is up 5598 people from December 2010 to January 2011.
The seasonally adjusted figure for the same period is down 6900.

As I recall the late CJH saying, there is no such thing as a seasonally adjusted person.
The jobless figure is up 5598 or 1.28% month on month.

@Cathal – “Apparently the number of redundancies notified to the Dept of Enterprise and Employment also fell by 26% in Jan 11 compared to Jan 10.”

All that means is people are still being made redundant.

All this spin around a seasonally adjusted 6900 is just that. What actually happened is that 5598 more people started claiming the dole. Many more left the country on a one way ticket.

There’s an awful lot of taking raw data out of context on here or deliberately being selective and/or ‘framing’ it.


Seasonally-adjusting is a well known and well established method used by statisticians the world over to take account for the quirks which happen over time which disguise real trends in the figures. Yes, the unadjusted figures did rise, but they usually do at this time of year as temporary staff taken on for the Christmas rush are laid off or the contracts expire. Similarly, the unadjusted Live Register usually drops a lot once Summer is over and teachers return to work. The CSO takes account of that and usually the seasonally adjusted figures are flat/show a small increase. The seasonally-adjusted figures are the ones which are important and the ones which must be given priority.

And yes, people are still being made redundant. It’s unfortunate and a terrible loss to the people involved but the fact remains that the numbers being made redundant have been falling over the last 12 months. They fell by over 20% in 2010 compared to 2009 and, if these January figures are any indication, they look like they’re going to fall 20% in 2011 compared to 2010. Add in the rise in vacancies being registered by the Morgan McKinley Employment Monitor, the rise in manufacturing employment measured by the NCB Manufacturers’ PMI and the stabilisation in agriculture because of the rise in incomes and we have the makings of a slight recovery in the jobs market this year.

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