European Commission Winter 2013 Economic Forecast

The Commission have released their updated economic forecasts for 2013 and 2014.  With an estimated –0.6% contraction in 2012 the eurozone is forecast to contract by a further –0.3% in 2013.

Ireland is set to be the third fastest growing eurozone country with the 1.1% growth forecast behind only Estonia (3.0%) and Malta (1.5%).  This is not a reflection of any strong performance in Ireland’s case.  Inflation for the eurozone at 1.8% is “close to but below 2%” though.

The public balance for the eurozone is forecast to fall from -3.5% of GDP last year to –2.8% of GDP this year.  No eurozone country is expected to run a surplus and at –7.3% of GDP Ireland will have the largest public deficit in the eurozone (the UK at –7.4% of GDP is expected to have the largest deficit in the EU27).

All of the details are available from this page (though for the moment some of the numbers in the interactive map do not match those in the statistical annex).

ECB Holdings of Peripheral Sovereign Bonds under the SMP

The SMP data have been released – here.  ECB holds euro 14.2 billion of Irish bonds (at face value).

Dealing with Private Debt Distress in the Wake of the European Financial Crisis A Review of the Economics and Legal Toolbox

New IMF WP here.

Long Run Income Inequality in Ireland

Those of you interested in long run trends in income inequality in Ireland might like to take a look at this piece from the magazine “Significance”.  It uses the difference between incomes of the top 10% less the incomes of the top 1% as its summary measure for inequality.  It takes a pure time series approach and suggests that for the last 40 years or so there is a  12 year cycle in inequality with a very slight upward trend.

Warning: As John McHale might put it, it is “wonkish”!

http://www.significancemagazine.org/details/webexclusive/4386781/Income-inequality-in-Ireland-from-1922-to-2009.html

Economic Assessment of the Euro Area

On behalf of the EUROFRAME group of research institutes, the ESRI today published a report entitled “Economic Assessment of the Euro Area”.

Among the findings contained in the report are the following:

·         As a result of relatively weak external demand, continuing financial uncertainty and the contractionary stance of fiscal policy, output fell in the Euro Area in 2012 (-0.5 per cent). Over the course of 2012 there was a slowdown in some key economies, which were previously contributing much of the growth. This slowdown has carryover effects into 2013.

·         Even though we anticipate a recovery in confidence in some major economies over the course of this year, the outcome for the Euro Area as a whole is still likely to be a further limited fall in GDP in 2013 of 0.3 per cent. Weak external demand will not be enough to compensate for the fall in domestic demand.

·         For 2014, a recovery in domestic demand should see a return to significant growth in GDP of around 1.3 per cent. However, this forecast must be considered in the light of the continuing vulnerability to financial shocks of a number of the Euro Area member states.

·         This vulnerability of countries in financial distress is being addressed through a continuing major fiscal adjustment. However, the fiscal adjustment under way across other members of the Area is also having a substantial negative effect on growth, particularly in the crisis countries. Without this fiscal adjustment the Euro Area would be looking to growth this year at around 1½ per cent and next year at approximately 2 per cent.