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NCB says Ireland is on right track

Tuesday, February 26 10:37:17

All in all, recent developments serve to reinforce the view that the Irish economy is continuing its gradual recovery, helped by the Prom Note deal and recent bond sales, according to an assessment of the economy from NCB today.

It said that the main event since its last update was the Promissory Note (prom note) deal, which served to ease Irish funding requirements into the longer term.

"Following the replacement of the amortising prom note with long-term government bonds, we have upgraded our deficit projections for both 2014 (from 5.4pc to 4.9pc of GDP) and 2015 (from 3.3pc to 2.6pc). Other positive developments include further well-covered T-bill issuance by the NTMA and, on the banking front, a well-received E500m Covered Bond sale by AIB," it said.

Both NCB Ireland PMI readings continued to provide encouraging read-through for the private sector, with Manufacturing (50.3) representing an 11th successive month of growth, and Services (56.8) in positive territory for six months in a row, the report said.

"The merchandise trade surplus for 2012 came in at E43bn, +0.2pc y/y, which is a creditable performance in light of the challenging conditions experienced by many of Ireland's key trading partners during the year."

Data released by the CSO showed that Irish residential property prices fell by 4.5pc in the year to December, the slowest pace of annual decline since May 2008. Elsewhere, data compiled by the PRSA showed a surge in residential property transactions in the final quarter of 2012. While some of this was attributable to the expiry of mortgage interest relief on December 31, mortgage approvals statistics from the IBF point to a further increase in sales this year. On the consumer side, core retail sales increased on an annual basis in both volume and value terms for a fifth successive month in December. Another indicator that is moving in the right direction is the Live Register, which fell for a seventh successive month in January. The annual rate of inflation was unchanged at 1.2pc in January.