O'LEARY CUTS 2008 ECONOMIC GROWTH FORECAST TO JUST 1.1% - Goodbody Stockbrokers has more than halved its forecast for economic growth this year, mainly because it expects more subdued consumer spending. Economist Dermot O'Leary was anticipating GDP growth of 2.3% in the middle of January, but three months later he has slashed that to a mere 1.1%. The stockbrokers expect an improvement to 2% in 2009, but that is still well below the previous expectation of 2.5% for next year. Compared to some observers, those are optimistic predictions.
Dermot O'Leary says that things are changing rapidly both in the Irish economy and globally. He admits that while it is early in the year to be changing economic growth forecasts, the economy has seen a turn in the labour market and points out that the Live Register numbers rose by 16% in the first quarter of 2008 - the highest increase witnessed since 1975. He says this is bound to have an effect on consumer spending patterns as the year goes on.
Defending his earlier forecasts, Mr O'Leary said a lot of factors changed in the first three months of the year. He said that things seen in the global economy during the last nine months have not actually been seen for decades. 'Things are changing very, very rapidly,' he states.
The economist says the domestic economy will contract this year, with falling consumption and government investment. He says the external trade sector will contribute to growth this year.
On the issue of oil prices, Mr O'Leary says he expects to see a fall in demand globally which should bring the price down to about $100 a barrel or below.
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MORNING BRIEFS - A director of a leading advertising agency who borrowed almost €430,000 from the company has been remanded on bail pending sentence after he admitted breaching the Companies Act. Stuart Fogarty pleaded guilty at Dublin Circuit Criminal Court to 13 charges of breaching the Companies Act of 1990. The law says that if a director takes a loan from the company exceeding 10% of the net relative assets of the company it is considered a breach of the Act.
*** Exploration company Island Oil and Gas has reported pre-tax profits of £418,000 sterling for the six months to the end of January. That is up from a loss of £5.34m the same time last year.
*** Yahoo, which has business operations here, said its profits tripled in the first three months of this year compared to last to $542m. While that beat forecasts, analysts say it was not enough to force Microsoft to up its $44 billion offer for the company. Yahoo says the current bid is too low but Microsoft says it will mount a hostile takeover later this month at a lower price.
*** On the currency markets, the euro is worth $1.5954 and 80.19 pence sterling this morning.
