ECONOMY
GLOBAL ECONOMY
NATIONAL ECONOMY
The OECD Interim Economic Outlook September projections for 2019 indicate global growth forecasts were revised to 2.9%. This is a significant downgrade compared to the estimated 2019 figure of 3.5%, which was predicted in November 2018. Ongoing trade conflicts are the principal cause of this decline, which continues to hamper confidence, growth and job creation across the global economy.
The Irish economy grew by 5.8% in real GDP terms in Q2 2019 compared with Q2 2018. The Information & Communication sector made a hugely positive contribution to this figure, rising by 32.4%. Budget 2020 was announced in early October and was based on the assumption of a disorderly Brexit, and the impact of such a scenario was assessed by the Department of Finance. GDP is estimated to be 3.8% lower compared to the ‘no Brexit’ case, while employment would be reduced by 2.1%. In the event that a deal is agreed upon, the impact on the Irish economy is forecast to be less severe. GDP is estimated to be reduced by 2%, while employment would fall by 1% compared to the ‘no Brexit’ scenario.
global economic policy uncertainty 360
320
gdp and export forecast under disorderly brexit 12
280
% YOY CHANGE
10
240
200
8 6 4 2
160
0
2019
2020
2021
GDP 120
2023
2024
Jun 19
Sep 19
Mar 19
Dec 18
Jun 18
Sep 18
Mar 18
Dec 17
Jun 17
Sep 17
Mar 17
Dec 16
Jun 16
Sep 16
Mar 16
Dec 15
Jun 15
Sep 15
source: Department of finance
Mar 15
80
2022
Exports
economic policy uncertainty 2019. note: the global epu index reflects the relative frequency of own-country newspaper articles that contain a trio of terms pertaining to the economy, policy and uncertainty.
UK ECONOMIC OUTLOOK The OECD’s UK growth forecast is based on the assumption that the UK reaches a deal with the EU and smoothly exits from the EU. In this best-case scenario, UK growth is expected to be lower by 1%. The quarterly survey released by the Confederation of British Industry revealed that optimism in the UK’s financial services sector had plunged at the most significant rate since September 2008, when Lehman Brothers collapsed. The sector accounts for 7% of British GDP, 9% of exports and 11% of all tax receipts, so any waver in confidence is likely to affect the wider economy.
global
3.6
2019 %f 2.9
irish macroeconomic growth forecasts 2019 %F
2020 %f
gnp
3.8%
3.5%
gdp
4.1%
3.3%
private consumption
2.7%
2.3%
3.0
public expenditure
5.5%
4.1%
7.1%
5.7%
major economies gdp growth forecasts 2018 %
The KBC Irish Consumer Sentiment Index revealed that confidence amongst consumers declined to a six year low in September 2019. Amidst the uncertainty and extension of the Brexit deadline to 2020, Irish households have increased their level of savings, despite very low interest rates. Data released by the Central Bank of Ireland revealed that household deposits reached €653m in August 2019, which is an increase of €200m in comparison with the same period last year. On a positive note, Foreign Direct Investment (FDI) in Ireland has increased significantly of late, according to the EY European Attractiveness Survey 2019. A total of 205 commitments were won by Ireland in 2018, which is an increase of 52% in comparison with 2017.
2020 %f
uk
1.4
1.0
0.9
investment
us
2.9
2.4
2.0
exports
5.0%
4.7%
5.7%
5.4% 4.5%
euro area
1.9
1.1
1.0
imports
germany
1.5
0.5
0.6
unemployment rate
4.8%
japan
0.8
1.0
0.6
employment
2.8%
1.8%
china
6.6
6.1
5.7
modified final domestic demand
4.1%
3.6%
india
6.8
5.9
6.3
modified total domestic demand
3.8%
3.2%
source: oecd world economic outlook, sept 2019
sources: ey economic eye forecasts. f: forecast; based on an orderly Brexit
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