Report: Employment to fall further and property correction not yet over

EMPLOYMENT in Ireland has further to fall and the property correction has not fully run its course but the US is likely to avoid a double dip recession, according to a report.

Managing director of Ulster Bank Wealth Brian Feighan said rarely has Ireland received so much international attention.

“One positive from this exposure is Irish investors are becoming much more outward looking when it comes to investment selection,” he said.

In the latest report from Ulster Bank Wealth, the bank’s chief economist Simon Barry said it would be wrong to assume that the Irish recovery will be plain sailing from here.

“Indications of a slowing global economy lately are a troubling development, notably in the US where a series of recent data points have disappointed to the downside.

“At this stage, it is difficult to know whether what is unfolding here is some softening in momentum following an early-cycle snap-back in growth or whether the global recovery is headed for a premature end,” he said.

Mr Barry said on the jobs front, the labour market is set to weaken further in the short term with the unemployment rate set to peak between 13.5% and 14% later this year, from 13.2% in Q2.

“The economy also continues to face a number of structural headwinds, most notably from the property correction which, while well-advanced has not yet fully run its course,” he said.

“Whatever about underlying budget targets remaining broadly on track, the considerable uncertainty about what the true final cost of recapitalising the banking sector will ultimately amount to has been weighing heavily on investor sentiment in Irish government bond markets,” he said.

Mr Barry expects stable to slightly positive annual GDP growth this year and a further gradual improvement in 2011, dependent on continued growth for Ireland’s main trading partners driving external demand.

According to the Ulster Bank Wealth global investment outlook, the US is to avoid a double dip recession but global growth will continue to be moderate.

It also said the likelihood of further quantitative easing is a positive for global markets.


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