Economy can overcome Brexit uncertainty, says Moody's
The Irish economy will be able to shake off the uncertainty posed by the Brexit vote, Moody's has said.
The ratings giant said Ireland would continue to outperform other European countries, forecasting the economy would increase by 3.4pc this year and 3.1pc in 2017.
That's more conservative that the predictions from the Department of Finance, but Moody's remains upbeat about the prospects for Ireland's economy. "Although the United Kingdom's June 2016 vote to leave the European Union leaves Ireland's economy exposed, Moody's believes that the uncertainty created by the vote is manageable for Ireland over the outlook period," Moody's said, in a note to investors. It also said that the Irish economy would likely perform strongly over the next two to three years.
The impact of the referendum result has already dented the Irish exporting sector due to the dramatic weakness in sterling. Business body Ibec has warned that if the pound weakens further, it could translate into hundreds of millions of euros in losses in the food and drink sector, with thousands of jobs put at risk.
Moody's also maintained its positive outlook for Irish banks, but warned the large stock of bad loans remains a "critical issue". It pointed out that problem loans for rated Irish banks were €41.5bn as of the end of last year, down from €67bn at end of 2014, and that they will fall further over the coming years.
Meanwhile, the Central Bank has named seven banks, including AIB and Bank of Ireland, as being 'Systemically Important Institutions'.
These include Citibank, Ulster Bank, Permanent TSB, Unicredit and Depfa, with capital buffers established for each.