NEW IDEAS CONFERENCE, LIMERICK. Jim Power, Chief Economist, Friends First 25th March 2009
The Irish Reality <ul><li>Economy in deep recession </li></ul><ul><li>Public finances deteriorating rapidly </li></ul><ul>...
Ireland - Unemployment
Sectoral Labour Market Changes Sector Change Q4 07 to Q4 08 Agriculture F&F -2,700 Other Production -12,400 Construction -...
Irish Economy in 2009 <ul><li>Will be a very difficult year </li></ul><ul><li>Unemployment will rise a lot further </li></...
Ireland Economic Forecast Average 2008e 2009f 2010f GDP -2.0% -4.5% -2.0% GNP -2.5% -6.6% -2.0% Consumption -2.0% -6.5% -3...
LIMERICK & THE MID-WEST
INDEX OF DISPOSABLE INCOME PER PERSON <ul><li>Limerick 0.3% above national average </li></ul><ul><li>Limerick -10.7% behin...
INDEX OF DISPOSABLE INCOME PER PERSON <ul><li>Mid-West 3% behind national average </li></ul><ul><li>Mid-West 0.6% ahead of...
INDEX OF GROSS VALUE ADDED PER PERSON <ul><li>Mid-West 13% behind national average </li></ul><ul><li>Mid-West 25.8% behind...
Live Register Trends
Employment by Sector SECTOR MID-WEST NATIONAL AVERAGE Agriculture F&F 7.6% 5.5% Manufacturing 17.5% 13.9% Construction 13....
Vulnerability of Mid-West <ul><li>33.8% of Labour Force in Construction/Agriculture/Manufacturing </li></ul><ul><li>32.6% ...
Population Change <ul><li>Change in population a key social & economic indicator </li></ul><ul><li>Limerick City appears t...
Average House Prices <ul><li>Supply has been limited so prices holding up relatively well </li></ul><ul><li>According to D...
Vision for Limerick City <ul><li>City in middle of a major regeneration programme that will totally transform face of city...
Public Initiatives for Limerick <ul><li>Transport 21 </li></ul><ul><li>Limerick City Council Draft City Centre Strategy – ...
Private Sector Initiatives <ul><li>Considerable interest by private sector in developing Limerick City </li></ul><ul><li>T...
What has Limerick Going For it? <ul><li>Close proximity to international airport </li></ul><ul><li>High quality educationa...
What Needs to be Done <ul><li>Heavy dependence on sectors under pressure, need for very pro-active employment policy </li>...
THE ROAD TO NATIONAL RECOVERY!
Conditions for Recovery <ul><li>International economic cycle needs  to improve </li></ul><ul><li>Stabilisation of housing ...
Competitiveness <ul><li>Cost base of economy needs to fall </li></ul><ul><li>Focus on outputs rather than inputs in public...
Strategic Vision <ul><li>Small Open Economy - never forget it! </li></ul><ul><li>Focus on Quality rather than Quantity </l...
Final Thoughts <ul><li>Strategic vision required </li></ul><ul><li>A new vision for capitalism - ‘Entrepreneurial Capitali...
 
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Jim Power New Ideas Conference March 2009

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Jim Power New Ideas Conference March 2009

  1. 1. NEW IDEAS CONFERENCE, LIMERICK. Jim Power, Chief Economist, Friends First 25th March 2009
  2. 2. The Irish Reality <ul><li>Economy in deep recession </li></ul><ul><li>Public finances deteriorating rapidly </li></ul><ul><li>Labour market deteriorating rapidly </li></ul><ul><li>Banking system still in a very uncertain place, despite re-capitalisation & nationalisation </li></ul><ul><li>Confidence in leadership fragile </li></ul><ul><li>Lack of understanding of realities of EMU membership - wages v fiscal policy </li></ul><ul><li>Confidence generally very poor across economy </li></ul><ul><li>Social Partnership model struggling to cope </li></ul><ul><li>Image of Ireland has been badly tarnished </li></ul>
  3. 3. Ireland - Unemployment
  4. 4. Sectoral Labour Market Changes Sector Change Q4 07 to Q4 08 Agriculture F&F -2,700 Other Production -12,400 Construction -45,900 Wholesale & Retail Trade -18,200 Hotels & Restaurants -10,500 Transport, Storage etc +900 Financial & Business Services -11,600 Public Admin. & Defence +600 Education +6,300 Health +3,500 Other services +3,100 Total -86,900 Source: CSO
  5. 5. Irish Economy in 2009 <ul><li>Will be a very difficult year </li></ul><ul><li>Unemployment will rise a lot further </li></ul><ul><li>Public finances will get a lot worse </li></ul><ul><li>Consumer dynamics will be difficult </li></ul><ul><li>Housing correction has further to run </li></ul><ul><li>Prospects for recovery in 2010 contingent on credit availability, international recovery, bottoming of housing market, </li></ul><ul><li>Competitiveness has to be the focus </li></ul><ul><li>All risks on downside at the moment </li></ul>
  6. 6. Ireland Economic Forecast Average 2008e 2009f 2010f GDP -2.0% -4.5% -2.0% GNP -2.5% -6.6% -2.0% Consumption -2.0% -6.5% -3.0% Investment -20.0% -25.0% -10.0% Government 3.0% 0.0% 0.0% Exports 2.0% -1.0% 1.5% Imports -2.0% -5.0% -1.0% Consumer Price Inflation 4.5% -3.0% -2.0% Unemployment (average) 6.3% 12.5% 14.0% e=estimate f=forecast
  7. 7. LIMERICK & THE MID-WEST
  8. 8. INDEX OF DISPOSABLE INCOME PER PERSON <ul><li>Limerick 0.3% above national average </li></ul><ul><li>Limerick -10.7% behind Dublin </li></ul><ul><li>Limerick 1% ahead of Cork </li></ul>
  9. 9. INDEX OF DISPOSABLE INCOME PER PERSON <ul><li>Mid-West 3% behind national average </li></ul><ul><li>Mid-West 0.6% ahead of South West </li></ul><ul><li>Mid-West third highest region </li></ul>
  10. 10. INDEX OF GROSS VALUE ADDED PER PERSON <ul><li>Mid-West 13% behind national average </li></ul><ul><li>Mid-West 25.8% behind South-West </li></ul>
  11. 11. Live Register Trends
  12. 12. Employment by Sector SECTOR MID-WEST NATIONAL AVERAGE Agriculture F&F 7.6% 5.5% Manufacturing 17.5% 13.9% Construction 13.2% 13.2% Wholesale & Retail 15.1% 14.5% Hotels & Restaurants 5.8% 6.1% Transport etc 6.2% 5.7% Financial & Other Business Services 9.4% 13.8% Public Admin. & Defence 4.4% 5.2% Education 6.7% 6.1% Health 8.8% 10.2% Other Services 5.3% 5.8%
  13. 13. Vulnerability of Mid-West <ul><li>33.8% of Labour Force in Construction/Agriculture/Manufacturing </li></ul><ul><li>32.6% for economy as a whole </li></ul><ul><li>3 sectors now under pressure </li></ul><ul><li>Lower level of Financial & Business Services </li></ul><ul><li>Planned construction activity positive for Limerick </li></ul><ul><li>Will need to be heavy focus on high-level employment creation in Limerick region </li></ul>
  14. 14. Population Change <ul><li>Change in population a key social & economic indicator </li></ul><ul><li>Limerick City appears to be doing poorly, but </li></ul><ul><li>Boundary Division distorts the real picture </li></ul>COUNTY/CITY 2002 2006 % CHANGE State 3,917,203 4,239,84 8 +8.2% Galway 209,077 231,670 +10.8% Cork 447,829 481,295 +7.5% Waterford 101,546 107,961 +6.3% Limerick City 54,023 52,539 -2.7% Limerick County 121,281 131,516 +8.4% Limerick 175,304 184,055 +5.0%
  15. 15. Average House Prices <ul><li>Supply has been limited so prices holding up relatively well </li></ul><ul><li>According to D.o.E New House Prices in Q3 2008 -5.0% in Limerick, -5.5% Whole Country, -15.8% Dublin, -3.6% Cork, 0.0% Galway -0.9% Waterford </li></ul><ul><li>According to D.o.E 2 nd Hand House Prices in Q3 2008 -9.4% in Limerick, -10.3% Whole Country, -15.8% Dublin, -10.2% Cork, -15.7% Galway +5.9% Waterford </li></ul>NEW Second Hand National € 301,680 € 335,762 Dublin € 347,233 € 412,152 Cork € 320,302 € 334,663 Galway € 281,177 € 310,865 Waterford € 290,357 € 301,387 Limerick € 271,161 € 263,793
  16. 16. Vision for Limerick City <ul><li>City in middle of a major regeneration programme that will totally transform face of city </li></ul><ul><li>Lots of vision </li></ul><ul><li>EML Architects </li></ul><ul><li>The Atlantic Way </li></ul><ul><li>Limerick Docklands Initiative </li></ul><ul><li>Murray O’Laoire Architects </li></ul>
  17. 17. Public Initiatives for Limerick <ul><li>Transport 21 </li></ul><ul><li>Limerick City Council Draft City Centre Strategy – ‘ allow easy access to city centre by public and private transport, to park safely and conveniently and move safely and easily on foot through places of enhanced environmental quality’ </li></ul><ul><li>Regeneration Project – major economic & social plan </li></ul>
  18. 18. Private Sector Initiatives <ul><li>Considerable interest by private sector in developing Limerick City </li></ul><ul><li>The Opera Centre €500 million development </li></ul><ul><li>Arthur’s Quay €500 million project </li></ul><ul><li>These development will utterly transform face of Limerick City </li></ul>
  19. 19. What has Limerick Going For it? <ul><li>Close proximity to international airport </li></ul><ul><li>High quality educational offering </li></ul><ul><li>Affordable housing market </li></ul><ul><li>Strong offering in Arts & Culture </li></ul><ul><li>City Council that is open for business </li></ul><ul><li>Transport 21 is opening up city </li></ul><ul><li>Regeneration project </li></ul><ul><li>Shannon Development Agency </li></ul><ul><li>Strong Private & Public Sector commitment </li></ul><ul><li>Strong sporting offering </li></ul>
  20. 20. What Needs to be Done <ul><li>Heavy dependence on sectors under pressure, need for very pro-active employment policy </li></ul><ul><li>Sort out Governance Structure to create shared vision </li></ul><ul><li>Avoid pitfalls in regeneration </li></ul><ul><li>Official vision needs to be shared by all stakeholders and realised </li></ul><ul><li>Improve tarnished image </li></ul>
  21. 21. THE ROAD TO NATIONAL RECOVERY!
  22. 22. Conditions for Recovery <ul><li>International economic cycle needs to improve </li></ul><ul><li>Stabilisation of housing market </li></ul><ul><li>Solution to banking crisis </li></ul><ul><li>Exchange rate improvement </li></ul><ul><li>Fiscal certainty </li></ul><ul><li>Competitiveness </li></ul>
  23. 23. Competitiveness <ul><li>Cost base of economy needs to fall </li></ul><ul><li>Focus on outputs rather than inputs in public spending </li></ul><ul><li>Lower cost of housing </li></ul><ul><li>Lower fuel & energy costs </li></ul><ul><li>Lower local authority charges </li></ul><ul><li>Focus on quality of labour force </li></ul><ul><li>IT capability </li></ul><ul><li>Broader tax base, low marginal rates </li></ul><ul><li>Proper regulatory framework </li></ul><ul><li>Functioning banking system </li></ul><ul><li>External image of Ireland </li></ul>
  24. 24. Strategic Vision <ul><li>Small Open Economy - never forget it! </li></ul><ul><li>Focus on Quality rather than Quantity </li></ul><ul><li>Pick sectoral winners </li></ul><ul><li>FDI </li></ul><ul><li>Agri-Food </li></ul><ul><li>Tourism </li></ul><ul><li>Service exports </li></ul><ul><li>R&D </li></ul><ul><li>IT as a solution provider </li></ul><ul><li>Labour market flexibility </li></ul><ul><li>Effective anti-corruption laws & enforcement </li></ul><ul><li>Effective regulatory institutions </li></ul><ul><li>The Washington Consensus </li></ul>
  25. 25. Final Thoughts <ul><li>Strategic vision required </li></ul><ul><li>A new vision for capitalism - ‘Entrepreneurial Capitalism’ significant role played by small innovative firms </li></ul><ul><li>Strong effective leadership </li></ul><ul><li>Promotion of entrepreneurial culture </li></ul><ul><li>High quality economic growth the only way to solve fiscal and labour market crisis! </li></ul><ul><li>Quality of labour force key </li></ul><ul><li>No silver bullet - but we have to make it happen rather than wait for it to happen </li></ul>

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