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Growth? Maybe. Maybe not. January 22, 2013

Posted by WorldbyStorm in Uncategorized.
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It’s hard to quite square the news from IBEC yesterday that there will be 1.8 per cent growth this year and ‘rising consumer sentiment’ with the other finding that consumer demand will not increase and also this from the Sunday Business Post at the weekend. Reports by KPMG and RSM Farrell Grant Sparks both suggest that:

…retailers would struggle, with consumer spending likely to fall heavily this year as a result of the increased tax and austerity in December’s budget.
Despite many shops reporting brisk business over Christmas, the reports question whether sales were strong enough to save a number of struggling businesses.
The two reports come in the same week as a receiver was installed at HMV’s 16 Irish outlets and an examiner appointed to 12 stores in the Pamela Scott fashion group.

Interestingly they suggest that many retailers used the Christmas period to push for ‘early sales’ rather than holding off until the post-Christmas period. And they suggest that this will have negative impacts on earnings, which stands to reason. If I can sell x at a higher price from December 1st to 31st, then cutting the price on the 26th doesn’t just lose potential sales at the higher price for the rest of December but also eats into sales that would have occurred in January. But in a way who can blame retailers, particularly when one reads the rest of the SBP piece?

In an analysis of the retail market, Farrell Grant Sparks said that 277 retail firms had gone into liquidation, receivership or examinership last year, adding that “significant uncertainty is likely to prevail in the coming weeks and months”.
It added that there would also be implications from the retail downturn in Britain, which would have an impact on Irish subsidiaries, as seen in the case of HMV.
In a separate report, KPMG’s restructuring department predicted a large number of retail restructurings during 2013.

It’s this that makes the IBEC report seem so – well, panglossian is the term that springs to mind. IBEC’s prediction is for growth somewhat ahead of government rates, but what is it built on? And given the now predictable (‘certainty’ copyright E Kenny) taxes and charges racing towards citizens for later in the year one wonders at the ability of the economy to absorb a fifth, or is it sixth, year of austerity.

And of course it’s not just austerity. The good news never stops…

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Comments»

1. richotto - January 22, 2013

Its just a straw in the wind but walking around the sales in Dublin looking for bargains I feel theres less on offer than last year. Perhaps the retailers know more than they’re letting on?

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2. CL - January 22, 2013

Lies, damn lies and ‘spurious precision.’

“Macro forecasts are almost always wide of the mark. There is no known methodology in macroeconomics which offers acceptable forecast accuracy, and there are good reasons for expecting that none will ever be created. In these circumstances it is surely time to abandon the spurious precision of these number-crunching exercises….
The available data contain no evidence of any actual pick-up in Ireland and the IMF predicts a slowdown across Europe next year. The prospect of continuing zero growth is therefore real.”-Colm McCarthy

http://www.independent.ie/opinion/analysis/colm-mccarthy-look-at-the-numbers-hoping-for-the-best-is-an-exercise-in-futility-3334359.html

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3. Michael Taft - January 22, 2013

It’s a little curious that the IBEC projections received a ‘good news’ treatment. They now project consumer spending will grow by 0 percent this year. Three months ago they projected that consumer spending would rise by 0 percent. When it comes to GDP projection, IBEC now estimates 1.8 percent growth. Three months ago they projected 1.8 percent growth. Six months ago they projected growth of 2.3 percent. Nine months ago they projected growth of 2.4 percent. I guess a projection that doesn’t have a revision downwards constitutes ‘good news’.

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4. 6to5against - January 22, 2013

I just presumed it was all part of the 12-month budget cycle.
Haven’t we had positive news around this time each year over the last 2-3 years? It’s important to reassure the populace that all the struggle and brave sacrifice has been worth it and that now we’re on the way up.

in a few months time we’ll be back to the stories about our unsustainable benefits/pensions/public sector as the softening up begins for budget 2014. Which will be the ‘hardest budget ever’. Just like this years.
Though it will also be the last of the really tough budgets. Just like this years

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CMK - January 22, 2013

Spot on, groundhog day. At least we have a vigilant and critical media who are dedicated to telling it like it is…..

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5. It would be interesting to hear what IBEC has to say about this… « The Cedar Lounge Revolution - January 30, 2013

[...] in relation to those IBEC figrues this comment from Michael Taft on this thread is [...]

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