Powertalk: 2021 The Year Ahead
January 26, 2021
Rachel O' Shea
As a brokerage, we are fortunate to have the support of each life company & investment firm in the Irish market. We receive regular communication from investment managers, economists, underwriters and actuaries detailing economic outlooks, stock market trends, claim statistics and the like.
Recently, economist Jim Power, gave his economic forecast for 2021 which generated a lot of interest when shared with clients, prompting this week’s blog to share to a wider base. Full report can be read here.
The year ahead:
Looking ahead to 2021, it is possible to be optimistic,
subject of course to all of the same caveats about the
mutating virus and the vaccines. The very stringent
restrictions in place in January, which could last
well into the first quarter, will obviously have a very
significant impact on economic activity. There is not
a lot that can be done about that. It is necessary to
bring infection levels down, but Government will have
to continue to provide strong financial support to
households and businesses for the foreseeable future.
The hope is that an effective vaccine programme will
be rolled out as quickly and efficiently as possible, and
restore some semblance of normality to the economy
and society in the second half of the year.
One of the interesting features of the Irish economy
in 2020 was that in the first 11 months of the year,
household savings increased by €13.1 billion to reach a
record high of almost €123.6 billion. At some stage, most probably later in 2021, much of these savings will be unleashed in the economy, along with pent-up business investment. This should set the scene for a decent rebound in the economy.
The multi-national segment of the economy is also a
source of optimism. The end-year results from the IDA
show that IDA supported companies increased net
employment by 8,944 during 2020 to reach 257,394 jobs
in the FDI component of the economy. This is really
important in the current challenging environment.
Notwithstanding the current stringent restrictions in
place, there are grounds for optimism about Ireland’s
economic prospects later in 2021. Much of this optimism is obviously contingent on a successful rollout of the vaccine programme.
We will also have to mindful of the Brexit impact, and the fact that it will take some time for tourism-related activities to recover. Businesses in these areas will need to get as much ongoing financial support as possible. Apart from the evolving COVID-19 situation and the implications for the health service, housing is likely to dominate political discourse, as it should.
Jim Power, Powertalk 2021