The recovery in the US economy suggests that better days lie ahead on this side of the Atlantic, according to Bank of Ireland Chief Economist Dan McLaughlin.
Speaking to The Munster Express in Kilkenny last Thursday, Mr McLaughlin said the ‘bottoming out’ of the US housing market suggests the seeds of a Stateside recovery are now being sewn.
“And obviously we all hope that this will spill over into Europe and Ireland,” he added.
Ireland entered the slowdown later than other economies due to the drop in the housing sector, which has dented tax revenues and construction employment numbers.
And while the strong euro, higher interest rates and construction slowdown has added to Irish economic woes, Dan McLaughlin believes “that the fundamentals of the economy are sound”.
He added: “As our borrowing as a percentage of GDP is low, a budget deficit of four per cent next year is possible.”
Amongst the sunnier of Irish economists given the current climate, Dan McLaughlin believes that falling oil prices and interest rates will contribute to better times in the not too distant future.
“I didn’t expect the slowdown to be as sharp as it has proven,” he admitted.
“The fall in capital investment, particularly in relation to construction, was huge. House building has decelerated incredibly. The construction of several factories, hotels and offices has been put on hold, while car purchases have been deferred.”
Yet Mr McLaughlin believes recovery will be aided by both exporters and consumers and in the long term has identified Ireland’s increasing population as a key factor looking down the line.
“This will affect housing demand,” he continued. “And our strong positive age demographic, with an average age of 33/34, compared for example to 45/46 in Germany, will also aid growth.”
So, as far as Dan McLaughlin is concerned, the economic glass is set to be half-full again sooner rather than later. A bit like the Waterford hurling team needs to be this week, it’s ‘chins up’ all round, he feels.