THE GLOBAL economy is on the cusp of a more “vigorous rebound” than anticipated by forecasters, Davy Stockbrokers said in an extremely bullish research report yesterday.
On the same day, rival brokerage house Goodbody sounded a more cautiously optimistic note, predicting that although the Irish economy will contract again next year, a recovery is in sight.
Launching Davy’s new quarterly global market strategy report Alpha Generator, chief global strategist Donal O’Mahony said the unprecedented interventions of the last 12 months have worked, resulting in a rapid “about-turn” in global financial conditions.
Goodbody is more confident an export-led recovery is on the way, its economist Dermot O’Leary said yesterday in a quarterly update.
The outlook for the Irish economy has “brightened considerably”, the update said. Goodbody now expects GDP to shrink by just 1.1 per cent in 2010 rather than 3.7 per cent as previously projected, and in 2011, GDP is expected to expand by 2.4 per cent, instead of 1.2 per cent.
“However, this will not be a V-shaped recovery. Fiscal consolidation and deleveraging will continue to be a drag on domestic momentum in the coming years.”
Davy was more optimistic, forecasting a growth rate of 3.9 per cent (on a GDP basis) in 2011. Mr O’Mahony argued that as a small, open economy, “the global rising tide could lift us” if Ireland succeeds in getting the banking system functioning again.
“The extent to which our export performance – in the worst of times – held up was remarkable,” he noted. Ireland will be able to benefit from the revival in international trade, he added.
Commenting on the global economy, Mr O’Mahony said there has been a “shift in the epicentre of global economic activity” from the developed world to developing countries.
