St Patrick’s Day promotion is key as global growth slows

This week an array of Irish Government ministers have travelled to all corners of the world to promote Ireland.

Predictably, the usual suspects are questioning the amount of money expended on these trips and the usual begrudgery is very much in evidence.

This is a real case of knowing the price of everything and the value of nothing, but this complaining is now a ritual that we have become all too familiar with.

St Patrick’s Day affords this tiny island an incredible global opportunity to market all that is best in the country. President Trump will eventually pass into history, and the sooner the better. The opportunity for the Taoiseach to get such access to the White House is an opportunity that many other countries and leaders could only dream about.

As a small open economy where external trading relationships, foreign direct investment and tourism are so important.

This year our ministers are going out into a world that is becoming increasingly difficult and uncertain. Last week, the Paris-based Organisation for Economic Co-Operation and Development (OECD) published its latest outlook for the global economy and it certainly sets the most negative and cautious tone we have seen for some time.

Global growth prospects for this year and next have been revised downwards. The key risk factors highlighted by the OECD include the slowdown and imbalances in the Chinese economy; a weakening European economy; slower global trade and manufacturing activity; intense policy uncertainty, not least due to Donald Trump and his protectionist agenda and high corporate debt levels.

Following very strong eurozone growth momentum this time last year, the subsequent economic performance has been very disappointing and does suggest that there are structural impediments to growth in the eurozone economy.

The OECD points out the need for structural reform, as have many others over the years, but nobody seems to be too sure just what that structural reform should entail.

Whatever the reforms needed, the politics involved make it highly unlikely that it will ever happen. The economic and monetary union seems destined to muddle along at sub-par growth rates and the US will continue to outpace that in the euro area.

At last week’s meeting, the ECB announced that it was going to introduce its third round of targeted longer-term refinancing operations in order to pump liquidity into the system and encourage stronger bank lending. This smacks of desperation, as interest rates cannot be cut any further.

Perhaps it is time that governments across the eurozone, particularly Germany where the fiscal situation is strong, embark on a programme of fiscal expansion.

However, given the political mindset in countries such as Germany, this does appear to be a step too far.

Meanwhile, the good news from an Irish perspective is that interest rates are not going anywhere anytime soon.

While this would be good news for Ireland, it does reflect economic weakness in the broader European economy.

Ireland should exploit the position on the global stage that St Patrick’s Day affords the country.

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