Economy 'has turned a corner', says Morgan
Published 16/09/2010 | 05:00
THE Irish economy has "turned the corner" and last week's announcement on Anglo Irish has provided a "clear future direction" for investors, Morgan Stanley has said.
The US investment bank added that the Government's plan for Anglo Irish, which splits the bank into a NAMA-type asset recovery and a funding based bank, will "alleviate some concerns" even though the final bill for the nationalised bank is not yet clear.
In a report entitled "Ireland: Mastering the Challenges Ahead", the bank forecasts that Ireland "should be able to adjust to the new post-crisis world" better than other eurozone nations and described Ireland as "fundamentally different" from other peripheral European countries because it is "a fully deregulated, fully liberalised, flexible market economy".
Last week, Irish bond yields -- the rate at which the state borrows money from international investors -- reached over 6pc, almost treble that of Germany, amid renewed fears about Ireland's finances and the uncertainty over Irish banks.
While agreeing that "the challenges" in Ireland are "somewhat bigger than elsewhere", the report said Ireland can "master the challenges" after gross domestic product grew by 2.7pc for the first quarter of 2010.
"While we would not read too much into a single quarter, as quarterly GDP data for small, open countries like Ireland are volatile and often subject to sizeable revisions, we believe that the economy has turned the corner," the report noted.