What will the economy look like in 6 months time?

Harry Palmr

Economic briefing underway on RTE News Now.

Economy down by about 10% at this point.

Estimate for 6% growth in 2021, which feels like a guess at this point! A quick bounce back needs a significant easing of restrictions

2022 before back to 2020.

23 billion deficit projected (7.5% of economy).

8 billion to be spent on public support payment as things stand.

EU area deficit rules being relaxed.

Tacitus Kilgore

Is this the end of the construction 'boom' then?

Surely the demand for housing will still be there, but ability to pay for up to spec new-builds might not be..


Are we heading towards even more build-to-lets as as a result of this?

Snow Garden

Harry Palmr wrote: »

2022 before back to 2020.

23 billion deficit projected (7.5% of economy).

For 2020 alone?

Harry Palmr

Yes I think so, hard to type and listen at the same time!

edit - yes just confirmed it.

204bn public debt rising to roughly 218bn

No bonds need settling or rolling over in 2021 (other than 400m bi-lateral bail out money from the UK)

Harry Palmr

Tacitus Kilgore wrote: »

Is this the end of the construction 'boom' then?

Surely the demand for housing will still be there, but ability to pay for up to spec new-builds might not be..


Are we heading towards even more build-to-lets as as a result of this?

Paschal Donohoe just mentioned house building specifically as to be maintained.

Geuze

Snow Garden wrote: »

For 2020 alone?

Yes.

See SPU:

https://www.gov.ie/en/publication/43a6dd-stability-programme-update-2020/

Geuze

Wanderer78 wrote: »

our money supply is shrinking due to less demand for credit, credit being the largest part of the money supply. cb money is needed to stimulate our economies,

Is the money supply falling at the moment?

I must check.

Feb 2020 data published 26 March

M1 narrow MS + 8.1%
M3 broad MS + 5.5%

https://www.ecb.europa.eu/press/pr/stats/md/html/ecb.md2002~e5a84e1f95.en.html

I will see is there any more recent data.

Wanderer78

Geuze wrote: »

Is the money supply falling at the moment?

I must check.

havent a clue to be honest, but id imagine it is, as demand has collapsed, new levels of bank created credit must also have collapsed

GazzaL

Here's a brief update on the economy:

Geuze

Wanderer78 wrote: »

our money supply is shrinking due to less demand for credit, credit being the largest part of the money supply.

Are you suggesting that the M1 and M3 growth rates will turn negative this quarter and during the summer?

Geuze

Wanderer78 wrote: »

havent a clue to be honest, but id imagine it is, as demand has collapsed, new levels of bank created credit must also have collapsed

OK, I'll keep an eye out for the March data, it should be out soon.

smelly sock

Some serious recession on the way Boys.

I reckon it'll be a hell of a lot worse than our last. This is a sudden sharp shock and collapse. Businesses have no time to plan or set aside cash to deal with it. It won't be as simple as wage cuts either.

Some sectors wont recover from this for years while some businesses in those sector will never reopen.

Can you actually fathom the potential damage and losses an ongoing and indefinite closure of our hospitality will have? The indirect impact on people like delivery drivers , cleaners , musicians etc will be devastating.

And being honest immigration wont be an option for many this time.

Scary times lie ahead.

Wanderer78

Geuze wrote: »

Are you suggesting that the M1 and M3 growth rates will turn negative this quarter and during the summer?

no im not suggesting anything, nobody can accurately predict future economic events, as all models are wrong, and my predictions would be beyond wrong, but you d have to ask, who the hell would take on debt in a major downturn?

JohnnyFlash

Jesus, they are some sobering figures. There's entire industries going to be wiped out with that sort of contraction in GDP. Can't see how a good old-fashioned euro print is going to help solve it either. Pan-European response required.

Brexit seems so small and insignificant an issue now in comparison to this clusterfúck.

Tacitus Kilgore

JohnnyFlash wrote: »

Jesus, they are some sobering figures. There's entire industries going to be wiped out with that sort of contraction in GDP. Can't see how a good old-fashioned euro print is going to help solve it either. Pan-European response required.

Brexit seems so small and insignificant an issue now in comparison to this clusterfúck.

At least this isn't intentional..

smelly sock

JohnnyFlash wrote: »

Jesus, they are some sobering figures. There's entire industries going to be wiped out with that sort of contraction in GDP. Can't see how a good old-fashioned euro print is going to help solve it either. Pan-European response required.

Brexit seems so small and insignificant an issue now in comparison to this clusterfúck.

Agreed.

GDP will shrink so much and all printing money will do is increase inflation.

Id say we they could tax the bollix outta us again.

landofthetree

smelly sock wrote: »

Agreed.

GDP will shrink so much and all printing money will do is increase inflation.

Id say we they could tax the bollix outta us again.

As bad as out figures are predicted to be what's its going to be like in southern Europe?

The poor Greeks for starters. A decade of pain with little recovery and now this.

Geuze

smelly sock wrote: »

GDP will shrink so much and all printing money will do is increase inflation.

Estimated inflation rates in today's SPU:

HICP = -0.6% in 2020, so mild deflation, 0.4% in 2021

Idbatterim

Ff fcuked up the economy last time, now fg are doing it....

landofthetree

Idbatterim wrote: »

Ff fcuked up the economy last time, now fg are doing it....

All parties agreed with the shutdown.

It was the only option unfortunately.

Wanderer78

smelly sock wrote: »

Agreed.

GDP will shrink so much and all printing money will do is increase inflation.

Id say we they could tax the bollix outta us again.

we re in a deflationary period, wont be much inflation from central bank printing

Idbatterim

landofthetree wrote: »

All parties agreed with the shutdown.

It was the only option unfortunately.

Shutting down construction and landscaping for a start, was idiotic!

Thespoofer

GazzaL wrote: »

Here's a brief update on the economy:

Jaysus the 5G conspirators are taking things a bit too far now!

GazzaL

It will be complete madness if people aren't allowed to return to work on the 5th. People are already returning to work on the quiet.

Kermit.de.frog

Idbatterim wrote: »

Shutting down construction and landscaping for a start, was idiotic!

Why do I get the impression that if they were left open you would be saying "they should have closed them", "look at the deaths", "and the cases"...etc etc

Xertz

Wanderer78 wrote: »

we re in a deflationary period, wont be much inflation from central bank printing

We are also in a very big currency. It hasn’t seen inflation when it’s been used for QE before and it’s generally too big to speculated against. So it’s about as big as it gets other than the USD.

Harry Palmr

smelly sock wrote: »

Some serious recession on the way Boys.

I reckon it'll be a hell of a lot worse than our last. This is a sudden sharp shock and collapse. Businesses have no time to plan or set aside cash to deal with it. It won't be as simple as wage cuts either.

Some sectors wont recover from this for years while some businesses in those sector will never reopen.

Can you actually fathom the potential damage and losses an ongoing and indefinite closure of our hospitality will have? The indirect impact on people like delivery drivers , cleaners , musicians etc will be devastating.

And being honest immigration wont be an option for many this time.

Scary times lie ahead.

Last crash was systemic in nature this one isn't, last crash saw hundreds of billions blown on propping up banks across the eurozone, some of which should have been allowed to fail (here - hello Anglo-Irish), this one is spending all the money on people - social security. So when the economy is opened up people will go back to work and the "dole" bill will start to fall. Inflation is dead, carbon prices are on the floor and will stay there as the world gradually moves to a post-oil energy market. The main threat to a rapid recovery is pushing down on the economy with a dogmatic austerity budget, now is when we need pump priming and pushing up with investment. God knows money and energy will never be cheaper - get building.

Tacitus Kilgore

Idbatterim wrote: »

Shutting down construction and landscaping for a start, was idiotic!

No it wasn't

landofthetree

Idbatterim wrote: »

Shutting down construction and landscaping for a start, was idiotic!

Have you ever been on a construction site? Even on the best of sites the drying rooms(where they change into to their work gear) can be very cramped for the tradesmen.

I think the suspension was necessary to make sure construction companies would adjust to social distancing. Plus it will help get the unions on side. Rightly the unions will want the sits to be safe.

Xertz

There’s a high risk of dogmatic austerity financial accounting type approaches in Europe. I don’t know if we have really moved past that mode of thinking in the EU.

Politicians aren’t economists and I think that’s something we forget. You end up having political debates about fiscal rectitude and moral hazard and all of that stuff which belongs in a philosophical discussion not an economic one. The markets generally don’t care. They are short to medium term focused and speculate.

I found during the 2008 crash you had all sorts of political commentators both imagining the markets were some kind of political entity with a long memory that would punish transgressors and also people who imagine the markets are somehow an all knowing prophet and that slides in value actually mean something.

If they see opportunity they invest. If they don’t they avoid investment. There’s nothing more to it than that. European bonds would be extremely safe investments and good places to stash cash. It’s very unlikely they’ll do anything other than be hugely beneficial to the Eurozone, including the NL and Germany and we sure as hell are not going to be paying signifiant interest on them. If the markets are still in turmoil they’ll be a safe haven and may even be offering negative yields.

The reality is politicians need to both play the game and realise they also control many aspects of the game. It’s not a household budget or the accounts of a small business, nor is the Eurozone a small economy that has to be a rule taker and get bounced around. I don’t think we really have begun to even think about the Eurozone as a big, powerful, single integrated economy. We’re mostly still locked in the mentality of small and medium nation state economies that were used to very agressive speculation on their currencies.

You can either use the very powerful tools of a gigantic Eurozone economy, or you can punish Italy and Spain because you perceive transgression of rules. The two aren’t the same thing and the NL and Germany are not going to be paying a cent. You’ll have huge investment in very safe haven bonds that will be costing us next to nothing and be incredibly low risk.

The upside is a potentially thriving Eurozone and EU that could well end up serious global economic nexus in the years ahead.

I also think throwing Eurozone problems into the IMF is an absolute disgrace. Europe is well able to solve these issues internally and easily and it’s just undermining itself by being petty and also undermining a global fund that is supposed to be for bailing out countries that have no other alternatives. It’s not meant for abuse by one or the world’s wealthiest places.