Quarterly Bulletin No.2 2018

Read the Forecast Summary Table | pdf 4438 KB.

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Read the full Comment for Quarterly Bulletin No.4 2018 | pdf 4438 KB.

Léigh tráchtaireacht ar an Timpeallacht Gheilleagrach | pdf 4438 KB.

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Following a strong outturn for 2017, the outlook for the economy remains positive. The latest forecasts contain small upward revisions to the projections for growth in 2018 and 2019, reflecting continued strength in domestic demand and a broadly improving international growth environment.

In the absence of divergent trends in the globalised sectors of the economy, which boosted headline growth figures last year, growth is expected to be broadly reflective of the strength of underlying conditions.

Read this chapter in full: Irish Economy | pdf 4438 KB.

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The improvement in financing conditions for households and Non-Financial Corporations (NFCs) has continued into 2018. The main constraints on private sector lending over the past few years – elevated levels of debt overhang and the high number of mortgage accounts in arrears - continue to recede. Net lending to households and NFCs has started to increase on an annualised basis as new loan drawdowns now exceed loan repayments.

Elsewhere, the number of mortgage accounts for principal private dwellings in arrears has been falling for four and half years but 10 per cent of PDH loans still remain in arrears. The amount of new restructure agreements is also starting to decline.  A number of risks continue to overshadow the outlook for households and NFCs.”

Read this chapter in full: Financing Developments in the Irish Economy | pdf 4438 KB.

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In the last decade, the Irish banking system experienced a systemic crisis, which saw Non-Performing Loan (NPL) ratios rise to among the highest levels in the euro area, followed by a sharp decline in NPL ratios that has not been experienced in many comparable countries.

This article highlights the sequence of policy interventions that were implemented by the Central Bank of Ireland as a response to this systemic crisis, beginning with the 2011 stress test and recapitalisation exercise that formed part of the Financial Measures Program. It then outlines how certainty around capital adequacy allowed policy to focus on the operational capacity and incentives of the banks and borrowers to resolve the NPL crisis in Ireland, highlighting the many specific measures adopted and lessons learned during the process.

We finish with a discussion of the risks and remaining challenges, with a focus on the large share of late-stage mortgage arrears cases outstanding on Irish banks’ balance sheets in early 2018.

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The construction sector bore the brunt of the employment loss from the economic and financial crisis that began in 2008. Almost one in every two workers who lost their jobs in Ireland in the five years from 2007 to 2012 had previously been employed in construction. While there has been a modest rise in construction employment since 2012, the number at work in the sector as of Q2 2017 was 110,000, or 46 per cent, lower than in 2007.

This raises the question: where are the construction workers who lost their jobs during the property crash? We find no evidence of the existence of a significant number of either unemployed or inactive former construction workers as of early 2017. Instead, while we cannot be definitive on the magnitude, our results point to a high rate of outward migration among unemployed construction workers during the 2008-2012 period.

This has implications for the recovery in the construction sector, with inward migration likely to play an important role in meeting the demand for labour in the sector as housing output picks up.

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Read the full Statistical Appendix | pdf 4438 KB.

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