Two-thirds believe economy has stabilised or improved
TWO separate reports yesterday pointed to green shoots in the economy. A survey suggested that two-thirds of adults believed the economy had either stabilised or improved, while Ulster Bank predicted economic growth would resume towards the end of the year.
The optimism contrasts with a recent slew of gloomier reports on the economy from overseas' observers which predict the taxpayer will be left paying more than the Government expects to fix the problems in the banking system.
The survey of 1,000 adults by Allied Irish Banks and market research company Amarach showed a significant rise in the percentage of people who believe Ireland will be through the worst of the recession by the end of the year. Just 43pc believed this to be true last month, when the Budget was announced, while 52pc hold the same view today.
The AIB/Amarach Recovery Indicator, which evaluates all the answers to the survey, surged to 27.1 this month from 18.3 in December, as a third of Irish adults agreed "the economic situation is bad but has stabilised".
Another third of respondents agreed "the economic situation is bad but showing a few signs of recovery".
Despite this optimism, most respondents said their main financial priority was paying off debts, while a quarter reported that they were saving more since the recession had begun.
"Although, from a macro perspective, Irish adults appear more optimistic about the future, they are still conservative with regard to their own personal financial outlook and they remain consistent in their views on savings and on debt repayment," the report concluded.
The new figures would appear to tally with the European Commission's Economic Sentiment Indicator -- which excludes Ireland but includes all other EU countries -- which rose yesterday by 2.1 points to 97.1 points. The index is "now back at a level approaching its long-term average in both areas," the EU said yesterday.
The signs of new optimism came as Ulster Bank issued a report on the economy. Mirroring the AIB/Amarach report, Ulster Bank economist Simon Barry predicts the economy will start to grow in the final quarter of the year. If this happens, it will be the first growth in three years.
"Very weak, but in the process of stabilising, is probably a fair assessment of where the Irish economy stands at present," Mr Barry said yesterday. "Following an extraordinarily difficult year in 2009, things are looking decidedly less negative as the economy enters 2010."
Despite his optimism, Mr Barry still expects gross national product to contract a further 1.2pc this year. This, however, marks an improvement on the economist's previous forecast of a 3.2pc contraction.
"We are not quite at the point yet where the underlying growth dynamic of the Irish economy has turned positive," Mr Barry added. "The property correction has further to run, with another sizeable fall in residential construction on the cards this year."