Your SlideShare is downloading. ×
0
Jim Power - Chief Economist
Jim Power - Chief Economist
Jim Power - Chief Economist
Jim Power - Chief Economist
Jim Power - Chief Economist
Jim Power - Chief Economist
Jim Power - Chief Economist
Jim Power - Chief Economist
Jim Power - Chief Economist
Jim Power - Chief Economist
Jim Power - Chief Economist
Jim Power - Chief Economist
Jim Power - Chief Economist
Jim Power - Chief Economist
Jim Power - Chief Economist
Jim Power - Chief Economist
Jim Power - Chief Economist
Jim Power - Chief Economist
Jim Power - Chief Economist
Jim Power - Chief Economist
Jim Power - Chief Economist
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Jim Power - Chief Economist

1,147

Published on

Enterprising Donegal Business Week 2011

Enterprising Donegal Business Week 2011

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
1,147
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. ‘ REALISING THE FULL POTENTIAL OF SMALL BUSINESS FOR ENTERPRISING DONEGAL BUSINESS WEEK 2011 Jim Power March 7th 2011
  • 2. GLOBAL ECONOMIC BACKDROP <ul><li>Global economic momentum solid </li></ul><ul><li>Developing economies showing strong momentum, particularly China </li></ul><ul><li>US – reasonable recovery, issues with consumer & fiscal deficit, but getting better </li></ul><ul><li>Europe – Germany doing very well, but sovereign debt issues casting a shadow </li></ul><ul><li>UK – reasonable growth momentum- but fiscal retrenchment now beginning to impact </li></ul><ul><li>Inflation fears growing in Euro Zone & UK ~ interest rates to rise </li></ul><ul><li>Risks are Fiscal Consolidation, Oil Prices & Banking Problems </li></ul>
  • 3. GLOBAL GROWTH FORECASTS Source: Capital Economics 2009 2010 2011f 2011f World -2.0% 3.4% 2.8% 2.3% G7 -3.7% 2.6% 2.0% 1.4% Euro Zone -4.0% 1.7% 1.0% 0.5% Japan -6.3% 4.2% 1.0% 1.0% UK -4.9% 1.7% 1.5% 1.5% China 9.2% 10.3% 9.0% 8.5% India 7.4% 9.2% 8.4% 8.6% Australia 1.3% 3.3% 3.8% 3.6% United States -2.6% 2.9% 3.0% 2.0%
  • 4. OIL PRICES (BRENT CRUDE)
  • 5. IRELAND – WHERE IS THE ECONOMY TODAY? <ul><li>Q1-Q3 2010 GDP -1.2% GNP -3.7%, but both expanded in Q3 </li></ul><ul><li>Retail Sales Volume +0.9%, Value -2.0% (2010) </li></ul><ul><li>Car Sales +55% in 2010 so Retail Sales ex-Motor Trade Value -4.3%, Volume -1.8% ~ weak January as USC hit </li></ul><ul><li>Manufacturing Output 2010 +8.4%; Modern +11.1%, Traditional +2.0% </li></ul><ul><li>Merchandise Exports +6.9% Imports +0.6% (2010) </li></ul><ul><li>Credit availability very difficult </li></ul><ul><li>Labour market conditions difficult </li></ul><ul><li>Public finance crisis </li></ul><ul><li>But Indications that economy is stabilising after dramatic fall </li></ul>
  • 6. MERCHANDISE EXPORTS (VALUE) Annual Growth (Jan-Nov 2010) Food & Live Animals +11.0% Beverages & Tobacco +11.1% Chemicals & Related Products +9.1% -Medical & Pharma Products - Organic Chemicals +14.4% +7.8% Machinery & Transport Equipment -20.7% -Office Machines & data Processing -30.9% Dairy +27.1% Meat & Meat Products +9.3% Total +5.8%
  • 7. STATUS OF IRELAND TODAY <ul><li>Emerging from deepest recession in our history </li></ul><ul><li>Public finance crisis </li></ul><ul><li>Banking crisis </li></ul><ul><li>Employment crisis </li></ul><ul><li>Domestic demand subdued – business investment weak, consumer confidence very fragile </li></ul><ul><li>Exports growing strongly </li></ul><ul><li>Manufacturing output growing strongly </li></ul><ul><li>External intervention was inevitable and ultimately positive </li></ul><ul><li>Challenging road ahead </li></ul>
  • 8. PERSONAL CREDIT (YOY)
  • 9. NON-FINANCIAL CORPORATE SECTOR CREDIT (YOY)
  • 10. REAL CONSUMPTION OF GOODS & SERVICES
  • 11. GROWTH IN REAL DISPOSABLE INCOMES
  • 12. PRESSURE ON THE IRISH CONSUMER <ul><li>Difficult labour market </li></ul><ul><li>Wage cuts </li></ul><ul><li>Sharp increase in personal taxation </li></ul><ul><li>Cutbacks in government expenditure </li></ul><ul><li>Destruction of personal wealth </li></ul><ul><li>Massive loss of confidence but </li></ul><ul><li>Sharp jump in precautionary savings </li></ul><ul><li>Lots of hard work before consumer confidence will recover </li></ul><ul><li>Consumers cutting back on discretionary spending </li></ul>
  • 13. CONSUMER CONFIDENCE (ESRI/KBC)
  • 14. WHAT IRELAND NEEDS TO DO <ul><li>Restructuring of public finances has to continue – Government cannot succumb to pressures – need to create sustainable public finances </li></ul><ul><li>Public sector needs to improve effectiveness </li></ul><ul><li>Banking crisis has to be sorted – will be slow & expensive – but little choice – debate about new banking model needed </li></ul><ul><li>Competitiveness agenda has to be pushed onto Dail agenda </li></ul><ul><li>Personal debt issues will need to be addressed – but no easy solution </li></ul><ul><li>Success cannot be regarded as a sin </li></ul><ul><li>Growth is the only way to solve various crises, but painful medicine has to be taken first </li></ul>
  • 15. THE ECONOMIC REALITIES <ul><li>Despite Government efforts the challenge is immense </li></ul><ul><li>€ 190 bln national debt by 2014, €9 bln interest bill ? </li></ul><ul><li>Fiscal correction €30 bln 2008-2014 </li></ul><ul><li>Is this manageable? </li></ul><ul><li>Are there options? </li></ul><ul><li>Populist notions gaining currency </li></ul><ul><li>Ireland will have to proceed with EU agreement </li></ul><ul><li>Unilateral approach not an option </li></ul><ul><li>EU will have to respond more forcefully to Euro Zone crisis </li></ul>
  • 16. PRIORITIES FOR FIRST 100 DAYS <ul><li>Provide forceful leadership </li></ul><ul><li>Appoint strong cabinet based on ability rather than politics </li></ul><ul><li>Change ministerial profile </li></ul><ul><li>Engage constructively with Europe on Irish realities </li></ul><ul><li>Commitment to fiscal objectives </li></ul><ul><li>Concerted effort to repair tarnished international reputation </li></ul>
  • 17. REASONS TO BE CHEERFUL? <ul><li>International background much better </li></ul><ul><li>High level of personal savings – precautionary savings driven by lack of confidence </li></ul><ul><li>Recession has been used to make the economy more competitive – but there is still a long distance to travel </li></ul><ul><li>Still many ‘real’ entrepreneurs and risk takers in Ireland – we must not drive them out </li></ul><ul><li>Reform of way in which public services are delivered </li></ul><ul><li>Opportunities presented by a decent crisis should not be wasted </li></ul>
  • 18. SOME PERSPECTIVES ON BANKING <ul><li>Model is dysfunctional – what sort of model should we aspire to? </li></ul><ul><li>Depositor confidence shattered </li></ul><ul><li>Full extent of black hole not yet obvious </li></ul><ul><li>Sale of AIB & BOI to foreign bank – if possible? </li></ul><ul><li>Creation of third force from the rest </li></ul><ul><li>Need for ICC type institution? </li></ul><ul><li>Profit maximisation as the key driver? </li></ul><ul><li>Incentivisation structures? </li></ul>
  • 19. SECTORAL CONSIDERATIONS <ul><li>Export sectors holding up well </li></ul><ul><li>Construction industry will remain weak ~ but long-term requirements exist </li></ul><ul><li>Financial services industry in serious flux </li></ul><ul><li>Hotel sector – serious over capacity </li></ul><ul><li>Retail sector – over capacity/difficult consumer outlook </li></ul><ul><li>Agri-food has potential, but challenging environment </li></ul><ul><li>Professional services offer potential </li></ul><ul><li>Personal services offer potential </li></ul><ul><li>Alternative energy has potential </li></ul><ul><li>FDI model under pressure </li></ul>
  • 20. BARRIERS TO ENTREPRENEURSHIP <ul><li>Cultural issues </li></ul><ul><li>Red tape & regulatory burden ~ need to achieve quality regulation & reduce costs of compliance </li></ul><ul><li>VAT regime </li></ul><ul><li>State costs – commercial rates, local authority charges, cost of employment </li></ul><ul><li>Other business costs – professional fees, energy, commercial rents, IT costs, insurance </li></ul><ul><li>Credit </li></ul>
  • 21. <ul><li>Any Questions? </li></ul>

×