UNEMPLOYMENT COULD hit a high of 15 per cent next year, according to economist Alan McQuaid of stockbroking firm Bloxhams.
Mr McQuaid predicts the unemployment rate will reach 13.2 per cent this year, below the generally accepted forecast of 14 per cent. It is now 12.4 per cent.
He estimates that the average rate for this year will be 11.8 per cent, as against 6.3 per cent in 2008. “Based on recent improving trends and a recovery in the global economy, we now see the jobless rate peaking at 15 per cent or just below in 2010,” he says.
Mr McQuaid also believes that house prices still have a long way to fall. He points out that on average, they almost tripled between March 1996 and the peak of the boom in January 2008.
He says that the average fall could be anything from 25 per cent to 50 per cent, with 40 per cent as a good ballpark.
“We cannot see the property market stabilising until labour market conditions improve and consumers become more confident about their job prospects.”
He argues that exports have performed well in the face of a generally weak global demand. Merchandise sales from the Republic were down 5.6 per cent in volume terms in the first six months of the year, a result that Mr McQuaid describes as surprisingly resilient. He says that services exports will play a key role in Irish economic recovery over the next few years, and points out that as they amount to 44 per cent of overseas sales, no other western economy depends as much on this sector.
“While we have made significant progress in recent months in reducing costs, more needs to be done, particularly in areas where the Government has direct control,” he adds.
