The ESRI released their Quarterly Economic Commentary today.  The Summary is here and the press release here.  Basically they see the situation stabilising this year and improving slightly next year.  That doesn’t sound too bad, but some of their data and conclusions are, I think, very worrying.  Here’s what they say about GDP/GNP:

  • “For 2010, we expect GDP to grow by ¼ percent in volume terms; the corresponding figure for GNP is for a fall of ½ per cent.
  • For 2011, we expect GDP to grow by 2¾ per cent and GNP to grow by 2¼ per cent. While this return to growth is to be welcomed, it should be seen as a modest pace of growth.”

The government deficit will be 11.5% of GDP in 2010, but will rise to 19.75% because of bailout for Anglo Irish Bank and INBS (19.75% is a massive amount of debt).  They suggest it will be 10% GDP for 2011 if austerity measures are implemented.  They argue against stimulus packages based on the possible costs per job.  They think that investment in education and training would be a better bet.  I’d be sceptical that by training people jobs will magically appear and the benefits to stimulus are savings on welfare, real outputs, the creation of infrastructure that will aid indigenous companies and attract FDI, and multiplier effects across the private sector.  Whether the markets/banks will be prepared to lend for stimulus programmes is a different matter.

With respect to employment, ESRI expects it to average about 1.85m for 2010 and 2011, with unemployment averaging 13.25% in 2010 and 13% in 2011.

The statistic that stands out most for me, however, is the prediction that 120,000 people will emigrate: 70,000 in the year ending April 2010 and 50,000 in the year ending April 2011.  This will take us back to the kinds of numbers emigrating at the end of 1980s.  Such emigration wi’ll provide a little bit of a safety valve on welfare payments, but the country will also lose a cohort of relatively young workers, many of them well skilled.  And it will exacerbate the housing supply issue and potentially slow up recovery there.  Given the state of the economy and levels of unemployment in lower age groups such emigration is no surprise, but it will have ripple effects in coming years.

We desperately need a jobs programme – not aspirational statements – but an actual programme with an associated strategy and road map, and it to be implemented and driven forward.

Rob Kitchin