Economics: Latest Irish central bank Macro Financial Review highlights global and domestic risks.

In its latest Macro Financial Review, released yesterday, the Central Bank said that risks to the projected output growth in the Irish economy remain to the downside. The impact of “Brexit” on the economy both in the short- and long-term is likely to be negative and material.

To date, “Brexit’s” effects have been predominantly through the depreciation of sterling against the euro. Exchange-rate effects, changes in UK demand, and any new barriers to trade arising from Britain leaving the EU, as well as any changes to broader international taxation and trade arrangements, could have an adverse effect on the Irish economy.

Meanwhile, overall credit growth remains subdued, with annual growth in bank credit to both the household and non-financial corporate sectors remaining negative. Some categories of household credit are showing positive growth, including non-mortgage credit and mortgage lending at fixed rates.

While household debt has been declining, some households remain highly indebted, leaving them vulnerable to a rise in interest rates. Those in the 30-44 age category have high debt-to-income ratios relative to other age cohorts and by international comparison.

Alan McQuaid (15/6/17)
Economist