Includes 3 FREE quarterly updates
Core Views
We forecast Irish real GDP growth to be a below-consensus 0.8% in 2013, as bleak external demand for Irish exports and an intensification of the government’s fiscal austerity programme weighs heavily on the country’s prospects for a strong economic recovery. The government’s commitment to reducing Ireland’s fiscal deficit to 3.0% of GDP in 2015 will see the impacts of austerity intensify over the next few quarters. We expect the fiscal deficit to fall to 5.1% GDP in 2013, from 7.8% in 2012.
With most of the straightforward revenue-raising fiscal reduction measures having already been taken, we believe austerity will become increasingly painful for Irish citizens over the next few quarters, and expect political unrest to rise gradually as a result. With Irish voters also likely to become increasingly disillusioned with the already unpopular Fine Gael/Labour coalition, we see potential for a greater number of disagreements between the two parties, but expect the coalition to remain committed to bringing down the budget deficit.
Major Forecast Changes
We have revised our real GDP growth forecasts to 0.8% in 2013 and 1.8% in 2014, from 0.4% and 1.4% previously.
Key Risk To Outlook
While the deal with the ECB in February to restructure bank debt servicing costs has made a successful bailout exit likely in 2013, we caution that a deterioration of the eurozone sovereign debt crisis could have disastrous consequences for the country’s economic and fiscal positions. As such, a significant downturn in the eurozone’s growth trajectory would undoubtedly damage Ireland’s economic growth prospects over the next few years. In such a scenario, reduced government revenues would weigh heavily on the country’s fiscal position, which could pave the way for the government to seek another debt deal with the Trioka.
Core Views
We forecast Irish real GDP growth to be a below-consensus 0.8% in 2013, as bleak external demand for Irish exports and an intensification of the government’s fiscal austerity programme weighs heavily on the country’s prospects for a strong economic recovery. The government’s commitment to reducing Ireland’s fiscal deficit to 3.0% of GDP in 2015 will see the impacts of austerity intensify over the next few quarters. We expect the fiscal deficit to fall to 5.1% GDP in 2013, from 7.8% in 2012.
With most of the straightforward revenue-raising fiscal reduction measures having already been taken, we believe austerity will become increasingly painful for Irish citizens over the next few quarters, and expect political unrest to rise gradually as a result. With Irish voters also likely to become increasingly disillusioned with the already unpopular Fine Gael/Labour coalition, we see potential for a greater number of disagreements between the two parties, but expect the coalition to remain committed to bringing down the budget deficit.
Major Forecast Changes
We have revised our real GDP growth forecasts to 0.8% in 2013 and 1.8% in 2014, from 0.4% and 1.4% previously.
Key Risk To Outlook
While the deal with the ECB in February to restructure bank debt servicing costs has made a successful bailout exit likely in 2013, we caution that a deterioration of the eurozone sovereign debt crisis could have disastrous consequences for the country’s economic and fiscal positions. As such, a significant downturn in the eurozone’s growth trajectory would undoubtedly damage Ireland’s economic growth prospects over the next few years. In such a scenario, reduced government revenues would weigh heavily on the country’s fiscal position, which could pave the way for the government to seek another debt deal with the Trioka.
EXECUTIVE SUMMARY
Core Views
Major Forecast Changes
Key Risk To Outlook
CHAPTER 1: POLITICAL OUTLOOK
SWOT Analysis
BMI Political Risk Ratings
Domestic Politics
Debt Deal Unlikely To Ease Social Unrest
Despite a deal being agreed with the EU in February to ease Ireland's repayment schedule, we expect to see an uptick in political unrest over the next few quarters as the government's fiscal austerity drive becomes increasingly painful for Irish citizens. While we fully expect the Irish government to remain firmly in fiscal consolidation mode over the next few years, we caution that social unrest and political disagreements could make driving through further reforms increasingly difficult for the governing coalition.
TABLE: POLITICAL OVERVIEW
CHAPTER 2: ECONOMIC OUTLOOK
SWOT Analysis
BMI Economic Risk Ratings
Economic Activity
Sluggish Recovery Ahead
With real GDP growth coming in at 0.0% q-o-q in Q412, we reiterate our gloomy outlook for the Irish economy in 2013 and 2014. We expect subdued private consumption, stagnating external demand, and the government's fiscal austerity drive to prevent a robust economic recovery over the next few quarters, forecasting real GDP growth of just 0.8% in 2013 and 1.8% in 2014.
TABLE: ECONOMIC ACTIVITY
CHAPTER 3: KEY SECTORS
Food & Drink
TABLE: SOFT DRINKS VALUE/VOLUME SALES - HISTORICAL DATA & FORECASTS, 2010-2017
TABLE: FOOD CONSUMPTION INDICATORS - HISTORICAL DATA & FORECASTS, 2010-2017
TABLE: MASS GROCERY RETAIL SALES BY FORMAT - HISTORICAL DATA & FORECASTS, 2010-2017
TABLE: ORGANISED RETAIL MARKET SHARE
Other Key Sectors
TABLE: AUTOS SECTOR KEY INDICATORS
TABLE: FOOD AND DRINK SECTOR KEY INDICATORS
TABLE: PHARMA SECTOR KEY INDICATORS
TABLE: TELECOMS SECTOR KEY INDICATORS
CHAPTER 4: BMI GLOBAL ASSUMPTIONS
Global Outlook
Lowering Our US And Eurozone Growth Forecasts
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES, REAL GDP GROWTH,%
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS,%
TABLE: EMERGING MARKETS, REAL GDP GROWTH,%
Core Views
Major Forecast Changes
Key Risk To Outlook
CHAPTER 1: POLITICAL OUTLOOK
SWOT Analysis
BMI Political Risk Ratings
Domestic Politics
Debt Deal Unlikely To Ease Social Unrest
Despite a deal being agreed with the EU in February to ease Ireland's repayment schedule, we expect to see an uptick in political unrest over the next few quarters as the government's fiscal austerity drive becomes increasingly painful for Irish citizens. While we fully expect the Irish government to remain firmly in fiscal consolidation mode over the next few years, we caution that social unrest and political disagreements could make driving through further reforms increasingly difficult for the governing coalition.
TABLE: POLITICAL OVERVIEW
CHAPTER 2: ECONOMIC OUTLOOK
SWOT Analysis
BMI Economic Risk Ratings
Economic Activity
Sluggish Recovery Ahead
With real GDP growth coming in at 0.0% q-o-q in Q412, we reiterate our gloomy outlook for the Irish economy in 2013 and 2014. We expect subdued private consumption, stagnating external demand, and the government's fiscal austerity drive to prevent a robust economic recovery over the next few quarters, forecasting real GDP growth of just 0.8% in 2013 and 1.8% in 2014.
TABLE: ECONOMIC ACTIVITY
CHAPTER 3: KEY SECTORS
Food & Drink
TABLE: SOFT DRINKS VALUE/VOLUME SALES - HISTORICAL DATA & FORECASTS, 2010-2017
TABLE: FOOD CONSUMPTION INDICATORS - HISTORICAL DATA & FORECASTS, 2010-2017
TABLE: MASS GROCERY RETAIL SALES BY FORMAT - HISTORICAL DATA & FORECASTS, 2010-2017
TABLE: ORGANISED RETAIL MARKET SHARE
Other Key Sectors
TABLE: AUTOS SECTOR KEY INDICATORS
TABLE: FOOD AND DRINK SECTOR KEY INDICATORS
TABLE: PHARMA SECTOR KEY INDICATORS
TABLE: TELECOMS SECTOR KEY INDICATORS
CHAPTER 4: BMI GLOBAL ASSUMPTIONS
Global Outlook
Lowering Our US And Eurozone Growth Forecasts
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES, REAL GDP GROWTH,%
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS,%
TABLE: EMERGING MARKETS, REAL GDP GROWTH,%
