Paul Sweeney: The OECD has just released an economic forecast which, in the light of the economic news over the past two years is quite positive. As Ireland will need other countries to do the "heavy lifting" as John Fitzgerald of the ESRI nicely puts it, this is good news.
There is no mention of Ireland in this report, which is on the world economy and which gives some positive pointers. But Ireland has had the deepest collapse in economic growth of all countries, and we will lag in our recovery. Further, with investment of precious taxpayers’ money in MANA/NAMA (MANA from heaven [your pocket] for the builders, speculators and bad bankers), we will delay our recovery somewhat.
Here are some of the points made by the OECD: “Given the positive economic news and based on incoming high-frequency indicators, OECD short-term forecasting models point to an earlier recovery than envisaged a few months ago.”
It says that falls in the cost of money market funding, a narrowing of corporate bond spreads, a rebound in equity markets and a moderation in the tightening of bank lending standards mean a marked improvement in financial conditions. BUT, “bank lending continues to decline and concerns about the health of the banking system remain.”
It sees “the housing markets in the United Kingdom and the United States show some signs of stabilisation,” which is not much use here.
It says that in the big developing economies, which were not directly affected by the meltdown in financial markets, “the recovery in economic activity that began earlier this year is gaining momentum.” China, for example, had GDP growth of over 14 per cent in Q2 of this year.
We will hope that the rise continues and that economists have learnt some lessons from the crisis about markets, regulation and the role of the state.
Paul Sweeney @paulsweeneyman
Paul Sweeney is former Chief Economist of the Irish Congress of Trade Unions. He was a President of the Statistical and Social Enquiry Society of Ireland, former member of the Economic Committee of the ETUC, a member of the National Competitiveness Council of Ireland, the National Statistics Board, the ESB, TUAC, (advisor to OECD) and several other bodies. He has written three books on the Irish economy and two on public enterprise, including The Celtic Tiger; Ireland’s Economic Miracle Explained and Selling Out: Privatisation in Ireland, chapters in other books and many articles on economics.
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