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current world economic outlook

As we open up, what is the Economic Outlook?

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There are a great many ways in which the Covid-19 emergency has affected the world we now live in. Our day-to-day lives have been irrevocably changed and everything from our daily habits to how we view and manage our mental wellbeing will likely be different going forward. Something which has been a concern for both business owners and employees is the notion of what state the economy will be in following this emergency, on both an Irish and a global scale. Today we will be taking some time to focus on the current world economic outlook following the recent World Economic Outlook press briefing this month and to share some of the current findings with all of our clients and friends.

The IMF has said that: “We are now projecting a stronger recovery for the global economy compared with our January forecast, with growth projected to be 6% in 2021 and 4.4% in 2022 after an estimated historic contraction of -3.3% in 2020.”

Which, despite some obvious issues in the coming months, and the uncertainty of these projections, is a positive outlook to look forward to, from 2022 onward. It is projected that some jobs lost in the pandemic will not be retrieved and this is likely to change the landscape of the global workforce going forward.

Chief Economist and Research Director Gina Gopinath has given some additional hope for the global economic outlook following on from the Covid-19 pandemic, stating that “even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible. Thanks to the ingenuity of the scientific community, hundreds and millions of people are being vaccinated and this is expected to power recoveries in many countries later this year.”

The idea of ‘secular stagnation’ is one that is important to bear in mind at the moment as economies have found themselves stalling in the midst of global lockdowns. This is a period of little or no economic growth, which is something we have experienced in recent months. Harvard Professor Lawrence Summers suggested in 2013 that these periods assisted in inflation dropping below 2% in Europe, the UK and the US. It can be argued that previous periods of secular stagnation have paved the way for this current emergency to be financially navigated with a positive slant, and for modern economies to come out of this period in a positive light.

Naturally, once global lockdowns begin to lift, economic activity will begin to massively improve but it remains to be seen how impacted the global economy will be by the previous year of emergency. Now is a time to take a longer-term view of the economy and to look forward to a rapid recovery for both our local and the global economy, with all involved keen to avoid another massive financial crisis. The economic rebound from Covid-19 is expected to be strong, with different countries naturally at different stages of their recovery and the UK expected to largely lead this recovery. These projections are naturally reliant on the virus itself as the economy is likely to follow the lead of the virus in that continued vaccine success will propel economic growth, while a continued pandemic and increased variants would slow the economic recovery significantly.

 

We hope that this information has been useful for you and as always, please don’t hesitate to contact us here at EcovisDCA where we remain open and ready to help.

2019 Economic Crystal Ball Gazing

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Hello and welcome to 2019! We here at EcovisDCA hope that all of our clients, colleagues and friends had a wonderful festive season and are well-rested and ready to face the working year ahead. With 2019 just getting ready to kick off, we have decided to begin the year with a little run down of the most prominent predictions for the financial year ahead. Chief Economist for EY, Professor Neil Gibson has given his predictions for the year even amidst all of the Brexit uncertainty surrounding the year, and it will be interesting to see what comes to pass.

  1. GDP Growth to rise by 4.2%

According to Dr. Gibson it is likely that 2019 will see GDP growth remain strong. Rising employment levels and increasing wages should all contribute to this growth which he estimates could reach 4.2% this year.

  1. Employment Growth to rise by 2.7%

In welcome news for our island’s continued economic recovery, it is predicted that employment rates will continue to rise in 2019. According to EY’s studies, Dublin is now the most popular relocation location for firms needing to move in full or part out of Britain due to Brexit

  1. Wage Growth to rise by 3.6%

Following on from the previous, it is predicted that wage growth will remain strong in 2019.

  1. Consumer Spending to rise by 2.9%

It is predicted that consumer spending will grow steadily in 2019, with Brexit making Ireland a very attractive trade location.

  1. Migration to Increase the Population by 40,000

In perhaps one of the more unexpected predictions, it is presumed that Brexit tensions and a growing labour market may create migration, as Ireland becomes a more attractive prospect for companies and workers alike. The risk here is that our ever increasing rent prices may postpone some of the influx.

  1. Inflation to Increase by 1.8%

It is predicted that in 2019 inflation may increase, as prices continue to push upwards.

  1. House Prices to Increase by 4%

An unwelcome prediction for many who already feel pressured by the house prices in Ireland. It is predicted that migration following Brexit may mean that this will be largely felt in rental prices.

  1. Construction Inflation to rise by 7.5%

As we have spoken about many times, there is an increasing demand for housing in Ireland and rising prices reflect this. It is predicted that the cost of construction will continue to rise in the year ahead.

  1. Housing Completions to top 25,000

Demand for housing is set to rise in 2019 and this is set to place a further push on the construction sector.

  1. Tax Collected from Businesses and Tax Payers will rise by 4.2%

This is likely to be a simpler process due to PAYE modernisation, and it is said that a strong labour market and strong economic growth should see an increase in collected tax going forward.

  1. Government to Spend more than Collected in Tax by 0.1% of GDP

According to Dr. Gibson, “Ireland looks set to enjoy its first positive general government balance in a decade.” As the pressure to spend increases, it is thought that the balance may tip in a more positive direction this year.

  1. Unemployment will reduce further to 4.9%

Unemployment was an issue that plagued Ireland during the economic downturn, and it is predicted that growth will cause unemployment levels to drop even further, perhaps even down to the levels seen at the peak of the financial boom.
It remains to be seen whether these predictions will come to fruition, and it will be interesting to check back in on them next year. We ourselves are very much looking forward to the year ahead and as always, should you have any concerns, queries or require further information on these or any other business and financial matters please don’t hesitate to contact us we are always available to help.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY