Author: Stephen Kinsella

Senior Lecturer in Economics at the University of Limerick.

Latest Central Bank Quarterly Bulletin

The Irish Central Bank is forecasting strong growth in Ireland of about 2% in GDP in the latest quarterly bulletin (.pdf). Pages 20 and 21 should interest readers of this blog. Thomas Conefrey and Suzanne Linehan dig into the employment growth numbers in a useful box-out. As usual the report is a chart fest, which is great for the wonky folk who frequent this site, but this one caught my eye. In the figure below you’re looking at household debt relative to disposable income, but also relative to total assets in the household sector.

What is remarkable is the scale of the problem relative to other developed countries. Irish debt to disposable income is about 196%, UK debt to disposable income is about 140%, US is about 120%. Here’s a really useful paper (.pdf) by Clare Lebartz looking at the distribution of household debt by income distribution which goes into the mechanics of this buildup a bit more.

The other sharp change is the brown line, driven by an increase in household assets mainly.

Domestic demand, credit flows, and employment

In a speech largely saying nothing, Mario Draghi today described how domestic demand, and absence of reforms are risks to growth. Reforms, of course, could mean anything at all, and they are the Eurocrat catch-all for ‘we don’t know’, but domestic demand is something we can measure, and it’s something the ESRI have worked a lot on recently (.pdf). Your average undergraduate knows about the relationship between employment and domestic demand, and should also be aware that credit conditions matter for the growth of the real economy.

If we look at the Irish economy, in levels indexed to Q1, 2007, the chart below shows total domestic demand and employment on the left hand axis, which I start at 60 to pull out the difference between them a bit, and, measured on the right hand axis, the bar chart shows the flow of credit advanced when you exclude financial intermediation and property.

On the last reading domestic demand is about 21% down from Q1, 2007, while employment is about 15% down from the peak in early 2008. The annual change in the employment series from Q42012 to Q42013 is about 3%, while the annual change in demand is almost 0%.

Credit advanced meanwhile is, unsurprisingly, negative, relative to Q1 2007, from Q3 2010 onwards.

Post-Troika, What’s Next For Ireland?

On the 28th of March at the Aviva conference centre, a conference looking at what’s next for Ireland will take place in the context of Ireland’s new economic governance rules. The programme is here. The conference is organised by the European Commission and the Dublin Chamber of Commerce.

Morgan Kelly: warns our real economic crisis will begin if ECB credit stops

Morgan’s latest Op-Ed is here, following his UCD lecture linked to by Seamus here.

Irish Economy Conference Slides and Recordings

Sincere thanks to Geary’s Mark Hargaden who processed the recordings from last week’s conference. For each speaker there is an audio recording synchronised with the slide show. There is a separate link to slides only, for those who do not want to listen. Unfortunately, due to a technical hitch, we did not secure an audio recording from Paul Gorecki, but we do have his slides.

Here is the link, with recordings/slides linked to the programme.

We can see the evolution of the conference over the last three years from this site as well, with previous years linked here and here.