OECD: EU action will help economy

Additional measures from the EU, combined with fiscal consolidation and further progress on structural reforms, would make Ireland well positioned to make a full market return in 2014, according to the OECD in its latest ‘Economic Outlook’ report.

The OECD (Organisation for Economic Co-operation and Development) noted that financial market confidence in Ireland had improved on the back of a successful implementation of the EU/IMF bailout programme. However, this improved market confidence has not fed through to improved lending to households and SMEs.

“Little progress has been made in dealing with non-performing loans and mortgage arrears continue to increase, although at a slower pace. Faster progress on both fronts is essential to strengthen credit growth, domestic demand and job creation.”

Exports will remain the key driver of growth, which means that the complexion of the economy over the near-to-medium term is highly dependent on health of the country’s trading partners. Business investment is expected to pick up as multinationals continue to increase their investment.

Decisive labour market reforms are needed to deal with stubbornly high levels of long-term unemployment, however.

Even though job losses look to have stabilised, the jobless rate still exceeds 14%.

The report said growth in the labour-intensive domestic economy is needed to solve the unemployment problem.

The eurozone remains the most challenged of the major economies. “Protracted weakness could evolve into stagnation with negative implications for the global economy. Such a perspective would resonate negatively with large persistent risks of adverse interactions between weakly capitalised banks, public debt financing requirements and exit risks.”

The OECD urged the ECB to take non-conventional measures to support growth in the eurozone as well as maintaining its accommodative monetary policy stance.

The strengthening of eurozone institutions, including banking union, is needed.

On a more positive note, competitiveness on the periphery is improving and government debt ratios are beginning to stabilise.

© Irish Examiner Ltd. All rights reserved

Email Updates

Receive our lunchtime briefing straight to your inbox

More in this Section

Irish banks rise as Fitch Ratings pares Brexit outlook

Ikea sales reignite Cork store hopes

China makes first investment in Irish energy market

U2 firm records profit of €3.7m


Breaking Stories

European Central Bank extends stimulus programme

14 video games it's time to start getting excited about

Facial recognition software refused this guy's passport photo saying his eyes were closed - and everyone thinks it was racist

Chrome for Android now lets users download web pages for offline viewing

Lifestyle

Fair City: Behind the scenes at Carrigstown

Ask Audrey has been sorting out Cork people for years

Well-known Irish people share their favourite books from their childhoods

Watch Michelle Darmody make the perfect Christmas cocktail

More From The Irish Examiner