The ESRI forecast record

The ESRI macro-economic forecast record has attracted some attention this week.

The Indo is unfair to Frances Ruane. The ESRI has long tried and failed to fill the gap in its expertise in finance. In 2006 and 2007, it was nigh impossible to hire an economist. Part of the problem was/is that the data on the financial sector were/are so murky.

The Irish Times is fair in its critique.

For the record, the ESRI did predict the end of the housing boom (as did most others because it was fairly obvious) but we did not foresee that this would coincide with a major international crisis in finance (again, we were not alone).

Waste incineration (episode N)

Stephen Collins writes about further delays with the Poolbeg incinerator in today’s Irish Times.

The promised review of waste projections is now overdue.

Paul Volcker on Ireland

Towards the end of a recent essay in The New York Review of Books (‘The Time We Have Is Growing Short’) Paul Volcker has some interesting remarks to make about the Irish economic situation.

IMF Concluding Statement on Ireland

The IMF has posted the concluding statement on its recent mission to Ireland: you can read it here.

Capital Spending

Scaling back capital spending has been a central plank of the Government’s fiscal adjustment strategy.  Nominal voted capital spending is set to fall from €7.2 bl. in 2009, to €6.5 bl. this year, to a planned €5.5 bl. in 2011.  However, based on an examination of the project pipeline, the Construction Industry Federation believes that the procyclical cutback in spending will be considerably more severe, and conclude that “the Government’s ability to achieve its own spending targets in 2011 and 2012 is now in serious question”.

The Taoiseach defended his Government’s capital spending plans at the IBEC President’s Dinner last evening.   In response, it is interesting to see both Lee Crawford, the incoming IBEC president, and David Begg argue vigorously for more protection of capital spending in side–by-side opinion pieces in today’s Irish Times.   Unfortunately, in arguing for investment to support domestic demand, neither addresses the likelihood of a national creditworthiness/domestic demand trade off.    This is just as limited a view as held by those who focus only on bond market constraints and ignore the demand implications of austerity plans. 

I hope there will be more debate on the appropriate current-capital mix of adjustment measures in the coming months — though I can’t say I’m optimistic.   It would be a pity if we end up following the path of least political resistance.