2 thoughts on “The Outlook for Credit in the Irish Economy”

  1. Seems outlook for credit not lookin good (-;

    I’ll take some! Where can I find it? (-;

  2. @ Philp

    Many thanks for puttiing this up and for all your other efforts. I am surprised it did not attract comment from the professional economists, unless that is happening elsewhere.

    ‘Despite the considerable drop in the amount of credit allocated to personal mortgages, driven to an extent by conservative loss assumptions,
    by 2013 it continues to account for a sizable proportion (60 per cent) of the overall stock of credit in the economy’

    Is there any economy in the world like Ireland’s ? It seems bizarre to the layman at elast.

    * We have a high-tech FDI manufacturing sector which does not draw on the stock of domestic credit to do its business.

    * The credit demand of domestic manufacturing amounts only to a few percent of the total credit stock..

    * We don’t have that many folk working in domestic high value service jobs, let alone export services, so it’s not as if we have ‘surpassed’ mere manufacturing.

    * Fig 4 illustrates the mountain of long term mortgage indebtedness. This burden is projected to occupy an increasing proportion of the outstanding credit stock. Even if it is not defaulted, the deleveraging pocess will act as a brake on lending to other sectors.

    * We have skewed our domestic economy enormously towards construction. The hole that we dug is certainly a big one, but in terms of product complexity, we are well down the scale after it all.

    * Even if the export boom somehow evades the many downnside risks, it will remain disconnected from significant employment growth. A jobless recovery at absolute best.

    I hope this is not just an Irish problem, because if it is, we would seem to be in the proverbial. As the saying goes, if I was going to Killarney, I wouldn’t start from here.

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