# Will there be a 'true' recession in Ireland?



## LLB123 (8 Sep 2022)

With the ECB rising rates to beat the band plus the energy crisis and overall sentiment in the news etc, it does seem that we are headed into a recession. But with the rising cost of energy largely self-inflicted, low unemployment, housing shortage and it seems no shortage of cash in government coffers, am I deluded in thinking that it's more of psychological one in that we're talking ourselves into it.
Thoughts?


----------



## odyssey06 (8 Sep 2022)

People are going to have to spend so much on basics -  energy bills, fuel, food.

They will cut back on discretionary spending - will hit employment in retail (clothing, appliances, gifts), entertainment, bars, restaurants, personal services.


----------



## cremeegg (8 Sep 2022)

The employment situation at the moment is nuts. I had an email from a major multi national asking me to review and apply for their vacancies.

A year ago they weren't recruiting. 

The housing situation is also nuts. In the longer term that's very bad for the economy, but it indicates a very strong economy right now heading in to the winter.


----------



## Purple (8 Sep 2022)

LLB123 said:


> With the ECB rising rates to beat the band plus the energy crisis and overall sentiment in the news etc, it does seem that we are headed into a recession. But with the rising cost of energy largely self-inflicted, low unemployment, housing shortage and it seems no shortage of cash in government coffers, am I deluded in thinking that it's more of psychological one in that we're talking ourselves into it.
> Thoughts?


We are one of the most open economies in the world and we rely completely on tax receipts from Multinationals who make their money outside Ireland. I believe that a recession, a real one, is inevitable. I believe that Europe will be particularly badly hit due to our short sighted policy of relying on Russia for energy.


----------



## Olunix (8 Sep 2022)

GDP is skewed so much by multinationals - I think Ireland technically will not enter "2 quarters of negative growth". The multinationals revenues will remain resilient, even through tough times like we saw in covid. But there will be a recession on the ground for citizens and local businesses in Ireland.


----------



## cremeegg (8 Sep 2022)

Purple said:


> We are one of the most open economies in the world and we rely completely on tax receipts from Multinationals who make their money outside Ireland. I believe that a recession, a real one, is inevitable. I believe that Europe will be particularly badly hit due to our short sighted policy of relying on Russia for energy.


The MNC's in Ireland are largely involved in fairly recession resistant industries, Pharma, med devices, IT. These are not as susceptible to recession as the fashion, luxury etc. industries


----------



## Purple (9 Sep 2022)

cremeegg said:


> The MNC's in Ireland are largely involved in fairly recession resistant industries, Pharma, med devices, IT. These are not as susceptible to recession as the fashion, luxury etc. industries


I agree. Old people consume medical and pharma products and they have the most money and the least debt but they aren't immune from a recession either.
We also have a large domestic economy in consumer goods and services which employs most of the workforce, the people who have jobs rather than careers. They are definitely exposed.


----------



## Purple (9 Sep 2022)

Olunix said:


> GDP is skewed so much by multinationals - I think Ireland technically will not enter "2 quarters of negative growth". The multinationals revenues will remain resilient, even through tough times like we saw in covid. But there will be a recession on the ground for citizens and local businesses in Ireland.


You might be right but the robustness of the MNC's through covid was entirely driven by unprecedented levels of money printing all over the world.


----------



## NoRegretsCoyote (9 Sep 2022)

Olunix said:


> GDP is skewed so much by multinationals - I think Ireland technically will not enter "2 quarters of negative growth".


It's more than possible but may not mean very much. Does anyone remember the Irish "recession" of 2015-16? No, but real GDP still fell for three consecutive quarters because of what MNCs were doing.







For me a better measure is the change in the prime-age employment rate. If that falls for two quarters then the economy is not doing well. You can see it sustained from 2007 to 2012 and then during the first Covid lockdown.


----------



## LLB123 (9 Sep 2022)

So would we be considered better insulated to recessionary outcomes as opposed to the rest of Europe given the multinationals and related preferential corporation tax rate? While I know discussion of property prices is forbidden here, I'm about to trade up and trying to take an educated guess as to whether this is a good or terrible move given current sentiment. Yet despite current sentiment to me, the dreaded 'fundamentals' seem sound. Famous last words?


----------



## NoRegretsCoyote (9 Sep 2022)

LLB123 said:


> I'm about to trade up and trying to take an educated guess as to whether this is a good or terrible move given current sentiment.


If you can afford the house and are happy to live there for decades then make the move.

A house is mainly for living in, not an investment vehicle.


----------



## LLB123 (9 Sep 2022)

NoRegretsCoyote said:


> If you can afford the house and are happy to live there for decades then make the move.
> 
> A house is mainly for living in, not an investment vehicle.


True, but last time I bought was in 2007 and have only just recovered from that. So I'm understandably wary of getting it wrong again. Timing really is everything.


----------



## NoRegretsCoyote (9 Sep 2022)

LLB123 said:


> but last time I bought was in 2007


As I said, think in decades!


----------



## interested21 (9 Sep 2022)

MNCs should not be viewed through a single perspective when it comes to their susceptibility to a recession.

Pharma is pretty recession proof as things go.

Big tech - as companies they will survive, but they will likely trim the fat in some of the functions in Ireland.

Smaller tech will struggle with the lack of VC funding.

My own job, like many others, falls into the "smaller tech" bucket. We are an MNC. We are in a strong position as a company and a product. However, many of the companies that we sell our product to are not in a strong position. Good companies employ a lot of people who sell to bad companies. This could cause a bit of a domino effect.

The end of the era of cheap money will be interesting in tech. When the tide goes out we will see who is swimming without their trunks.


----------



## Purple (21 Oct 2022)

The Financial Times is reporting that China's GDP actual growth this year will be between 2.7 and 3.0%, half of the target.
John Burn-Murdoch has an interesting article talking about the massive reduction in data published by China’s National Bureau of Statistics since Xi Jinping took over in 2012. China published good news, not bad news. They aren't publishing much news these days, particularly the sort of granular data that allows proper analysis of their headline numbers.
If anybody thinks China can have a recession, particularly the kind of one they are heading into, and the rest of us won't then they are kidding themselves.


----------

