IRISH ECONOMY 'BACK ON TRACK BY 2013' - Davy says the country will see have economic growth of 4% in two years time. The Economic and Social Research Institute says that if tough medicine is administered by the Government, recovery is 'possible' in 2011 or the year after. But other forecasters are less optimistic.
Barclays Capital's chief sterling strategist, Paul Robinson, says the view from London on the Irish financials a year after the introduction of the Government's guarantee scheme has improved. He says that one thing that has been learned during the crisis is that Irish banks, or UK banks, or banks anywhere are all part of the global financial system and a really important factor has been the stabilisation of the global banking industry. He says this has actually been more successful than had been expected six months ago. He says this is very good news for the Irish banks, as well as everyone else in the industry worldwide.
On the Irish economy, Mr Robinson says an Irish recovery will come, but it will not be quick. He says the country - on a quarter by quarter basis - will have positive economic growth by the end of next year. However, he expects 2010 growth on average to remain negative. 2011 should see positive, but slow growth, he adds. It won't be until 2013 does he expect the economy to be fully back on track.
As the euro trades at over the 91 pence sterling mark today, and after earlier hitting 93 pence this week, Mr Robinson says there is two factors behind the UK currency's weakness. He says the monetary policy of the Bank of England is hitting sterling and this might even lead to the bank increasing interest rates a little earlier than other central banks. The other factor affecting sterling is the issue of a British election and fiscal policy in the UK. The strategist says that people are over-reacting somewhat and points out that while the UK fiscal position is not great, the same situation is being seen in Germany, France, Italy with an even worse situation in the US and Japan.
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MORNING BRIEFS - Citi Group has opened a dedicated research and development facility in Dublin. It has also announced that it is investing another $24m in the development of a new payments solution, bringing its total investment in R&D in Ireland to $100m, and will result in 100 jobs by the end of next year.
*** A vote of confidence in Irish financials is how Bank of Ireland's recent fund-raising, announced yesterday, is being seen. The bank raised €1 billion when it sold bonds for the second time this month. They are due to be paid more than two years after the expiry of the Government's current bank guarantee, and over 90% of the take-up of the issue was by foreign investors.
*** The International Monetary Fund will raise its 2010 growth forecast for the world economy to 3.1% from 2.5% to reflect improving economic conditions, according to a report in a German newspaper today. It says the IMF has revised its global forecast for this year to a 1.1% contraction from a negative 1.4% before.
*** Sportswear giant Nike has reported a slight rise in quarterly profits after cost-cutting work helped to offset a fall in revenues. The US group made a net profit of $513m in the three months to the end of August, compared to $511m a year earlier. The firm said sales were continuing to fall, with global orders from retailers until the end of January 2010 down 6%. Future orders are down most in Eastern Europe, where they have fallen 28% from a year earlier. They have declined by 4% in the US and Canada, and by 8% in Western Europe.
*** On the currency markets the euro is trading at $1.4629 cents and 91.3 pence sterling.
