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Ireland Country Risk Reports Q2 2015

Ireland Country Risk Reports Q2 2015

Core Views

Ireland’s economy will expand at the fastest rate of any eurozone economy for the second consecutive year in 2015.

Falling unemployment, rising wages and low inflation should all boost household disposable incomes. This suggests domestic demand will play a bigger role driving economic growth.

Although a recovery in imports will probably shrink the trade deficit in 2015, Ireland’s exposure to US and UK demand suggests exports should remain steady, supporting the economy.

Declining support for Ireland’s main two parties means the outcome of the 2016 general election is becoming harder to call. The ruling Fine Gael/Labour coalition looks unlikely to remain in power in its current form, suggesting an increased chance of new coalitions being formed in the run up to the vote.

W hile threats to Ireland’s favourable operating environment for multinationals will grow over the coming quarters, they are unlikely to pose any significant risks as early as 2015.

Major Forecast Changes

We have revised our real GDP growth forecasts up to 3.1% in 2015, from 2.8% previously, on the back of a brighter outlook for the Irish consumer.

Executive Summary
Core Views
Major Forecast Changes
Key Risks To Outlook
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Political Landscape Becoming More Uncertain
Declining support for Ireland's main two parties means the outco me of the 2016 general election is becoming harder to call . The ruling
Fine Gael/Labour coalition looks unlikely to remain in power in its current form, suggesting an increased chance of new coalitions being
formed in the run up to the vote. A pact between Fine Gael and Fianna Fail would offer the most realistic chance of either of Ireland's
main two parties forming the next government.
TABLE: Political Over vie w
Long-Term Political Outlook
Political Challenges Beyond The Recession
Although political risk in Ireland is generally quite low, the country's economic downturn has put several structural issues into the
spotlight. Challenges over the next decade will include demographic changes, regaining living standards , migration and the country's
relationship with Northern Ireland .
Regional Political Outlook
EU Headed For Fresh Political Crises
The rise of far-left, far-right and other anti-establishment parties will cause significant problems for EU policymakers over the next few
years. While most of these non-traditional parties are unlikely to win power, mainstream parties will adopt some of their rhetor ic to
woo their support er s. This means less pr ogress trimming budget de ficits in the eurozone periphery and more opposition to the EU's
freedom of movement for workers principle in Western Europe. Alongside t he region's stuttering economy and perceived ineptitude
dealing with the Ukraine crisis over Russia, the EU's waning credibility suggests that existential threats to the eurozone could be the
most significant since 2012 over the next few years.
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Activity
Domestic Economy To Play Bigger Role
Ireland will remain the fastest growing eurozone economy in 2015, with domestic demand set to play an increasingly significant role
driving growth. The economy will also continue to benefit from the country's limited exposure to eurozone demand and attractive
operating environment for multinationals.
TABLE: Economic Acti vit y
Regional Monetary Policy
TABLE: Eur opea n Central Bank–Capital Key for Eur ozone Me mbers
Chapter 3: 10-Year Forecast
The Irish Economy To 2024
Solid Long-Term Growth Outlook
We hold a br oadly positive view towards Ireland’s economic growth prospects over the long term, with growth expec ted to average
over 3 % per annum over the next ten years. While exports will remain a key driver of growth , we expect the economy to rebalance
towards a more consumption- driven model over the next few years.
TABLE: Long-Ter m Macr oec onomic Forecasts
Chapter 4: Operational Risk
Operational Risk Index
Chapter 5: Key Sectors
Food & Drink
TABLE: Food Consu mpti on Indicators –Hist orical Data & Forecasts
TABLe: Hot Dri nk Value /Volu me Sales , Producti on & Trade –Hist orical Data & Forecasts
TABLe: Mas Grocer y Retail Sales By Format –Hist orical Data & Forecasts
Other Key Sectors
Table : Phar ma Sector Key Indicators
Table : Telec oms Sector Key Indicators
Table : Aut os Sector Key Indicators
Table : Infrastructure Sector Key Indicators
Chapter 6: BMI Global Assumptions
Global Outlook
New Era For Oil
Table : Global Assu mpti ons
Table : Devel oped States , Real GDP GrowtH, %
Table : Emergi ng Mar kets , Real GDP Growth , %

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