ON THE WARNINGS OVER THE PROPERTY MARKET:"The Department of Finance warned from 2005 onwards that the historically high share of construction as a share of activity left the economy vulnerable to macroeconomic shocks."
ON THE ESRI’S ADVICE ABOUT A PROPERTY BUBBLE:
“Warnings were sounded that the economy was over-dependent on construction. However, as recently as May 2008, they advised of ‘the need for a large number of additional dwellings over the coming 15 years . . .’
ON THE PRIVATE SECTOR’S WARNINGS:
“Bank and stockbroker economists repeatedly concluded that residential investment in Ireland was sustainable and prices were justified by fundamentals. Davy were somewhat the outlier in the mid-2000s, suggesting that ECB rates were far too low for Ireland and that exceptionally small rental yields implied overvaluation.”
ON WHY THE DEPARTMENT’S FORECASTS HAVE BEEN WRONG OVER THE PAST TWO YEARS
“Forecasting, at the best of times, is a hazardous activity. This is particularly the case in periods of exceptional volatility such as those witnessed in the past two years . . . ”
ON WHY THE DEPARTMENT’S FORECASTS WERE SO INACCURATE DURING 2009
“Forecasting is not an exact science and this inherent uncertainty has been increased to to the level of economic volatility experienced over the past two years.
“Most private sector commentators chose not to comment on the potential accuracy of our forecasts at the time of the supplementary budget.”
* Extracts from briefing material for the Department of Finance secretary general Kevin Cardiff at the Public Accounts Committee on May 6th, 2010