IRELAND'S return to capital markets and the recovery of the US housing sector suggest the global economy might be emerging from the financial crisis, Allianz Global Investors have said.
"It is the first time since this crisis started that we can say there are things falling into place that give us some hope that we might see some light at the end of the tunnel," Allianz Global Investors' chief investment officer Andreas Utermann said at a conference.
"The first area that looks much better is the piece that got us into trouble in the first place: the US housing market."
In the eurozone, Ireland's progress and its success in attracting foreign investors was another reason to consider that "on the margins" things are better than 12 months ago, he added.
"Ireland is very impressive. The Irish have partied for 10 years and they know that and they've paid the price," said Mr Utermann, whose firm manages more than €300bn. "Maybe in 2013 they're coming out and that would be a sign to the market to say yes, the eurozone crisis can be resolved. There is a way."
There was another sign that sentiment towards Ireland is mellowing from Finland yesterday when the country's finance minister said she was ready to consider lengthening loan maturities for Ireland and Portugal if requested, following the eurozone's latest decision to help out Greece. "From the fairness point of view, it would be understandable to give some kind of relief to them," Finance Minister Jutta Urpilainen told reporters.
Back in Dublin, the Central Bank sounded a more cautious note, warning that the economy and the banks remain crippled by debt and will only slowly return to growth, the Central Bank said in a report published yesterday.
"The external macroeconomic environment has continued to deteriorate and domestic economic conditions remain challenging," the bank said in a semi-annual review of economic trends. High debt levels, a weak outlook for disposable incomes and a depressed property market all present dangers, it added.
"A further weakening of the economy and disposable incomes remains a key risk to households", it said.
The bank paints a picture of the uphill struggle to reduce debt in this country. Home owners are repaying debts but their incomes are falling so the ratio of debt to income has hardly moved since hitting all-time highs at the beginning of the bust. Stabilisation of household income would allow people to make real inroads into their personal debt. Irish household debt stands at more than 200pc of disposable income, twice the eurozone average.
Another report from Ernst & Young on the domestic economy forecasts gross domestic product will remain flat for 2012, rising to 1pc in 2013 and 1.9pc in 2014. Like the Central Bank, Ernst & Young's economic adviser Neil Gibson says slowing exports are a concern.
Mr Gibson predicts consumer spending will contract 1.1pc in 2013 and rise just 0.5pc in 2014 before rising about 1pc in 2015. Unemployment is seen peaking next year at 15.3pc.