Budget 2015 Macroeconomic Forecasts
Presentation to Joint Committee on Finance,
Public Expenditure and Reform
7 October 2014
International Developments & Inflation
2
2012q1
2012q2
2012q3
2012q4
2013q1
2013q2
2013q3
2013q4
2014Q1
2014Q2
2012q1
2012q2
2012q3
2012q4
2013q1
2013q2
2013q3
2013q4
2014Q1
2014Q2
2012q1
2012q2
2012q3
2012q4
2013q1
2013q2
2013q3
2013q4
2014Q1
2014Q2
q-o-q % change
Mixed picture among trading partners
1.2
1.0
0.8
0.6
0.4
0.2
0.0
-0.2
-0.4
-0.6
US
UK
euro area
3
“lowflation” is prevailing in euro area
Source : Eurostat
4
Core inflation in Ireland rising steadily since February
5
Real economy
6
Strength in retail sales has continued into Q3
7
Investment has been driven by ‘core’ M&E and construction
8
National accounts measure of goods exports very strong
9
Outlook and labour market
10
Endorsed Budget 2015 forecasts
2013
0.2
3.2
174.8
2014
4.7
4.1
183.8
2015
3.6
3.3
193.0
Personal Consumption
Govt Consumption
Investment
Exports
Imports
-0.8
1.4
-2.4
1.1
0.6
1.7
4.8
14.6
8.3
8.8
2.2
1.0
12.5
4.8
5.1
Domestic demand (pp cont)
Stocks (pp cont)
Net exports (pp cont)
-0.7
0.3
0.6
3.6
-0.1
1.3
3.3
-0.2
0.8
HICP
GDP Deflator
Current a/c (% of GDP)
0.5
1.0
4.4
0.5
0.4
4.9
1.0
1.3
4.6
Year-on-year change
GDP
GNP
Nominal GDP (nearest €25m)
11
Continued improvements in the labour market
12
Labour market outlook
Employment growth
Agri
Industry (inc. B&C)
Services
Unemployment rate
Labour force growth
2013
2014
2015
2.4
1.8
2.2
24.3
2.5
1.8
2.0
2.7
2.8
1.2
1.7
2.1
13.1
11.4
10.2
0.4
-0.1
0.9
13
Drivers of labour market outlook
4.0%
25
Contributions to change in UE Rate
Labour force change
::: participation
3.0%
20
15
from LF growth
::: demographic ( >15 yrs)
net of migration
LABOUR FORCE change
from employment growth
2.0%
PP change in unemployment Rate
percentage points
Level ('ooo's)
10
5
0
-5
-10
1.0%
0.0%
-1.0%
-15
-2.0%
-20
-25
2011
2012
2013
2014
2015
-3.0%
2010
2011
2012
2013
2014
2015
14
Summary
• Recovery is gaining momentum and widening
• Forecasts are being revised upwards for this year
and next
• No-policy-change assumption is made for these
forecasts
– Subject to revision on Budget day
15
Risks
• External
– Geo-political tensions
– Weak growth and low inflation in the euro area
– Financial market risks
• Domestic
– Potential for more rapid recovery in investment
16
End
17