Business World

Sunday 17 December 2017

Rating revision deemed 'pretty insignificant'

Mark Deen

Goldman Sachs chief global economist Jim O'Neill has described Ireland's downgrade as "pretty insignificant".

"Germany could be entering a period of self-sustaining domestic demand," he said yesterday. "If that were true, it would be of major importance for the rest of Europe. Germany is a third of the euro area. Ireland is tiny, its downgrade is pretty insignificant."

German business confidence unexpectedly rose to a three-year high yesterday, driven by a jump in retailer sentiment.

"What is coming through more and more is evidence of improving domestic demand," Mr O'Neill said. "It's been such a long time since the German consumer has been spending. If it were for real, it's going to turn out to be major."

Mr O'Neill said a spate of "disappointing" US economic reports may prompt the Federal Reserve to embark on a fresh round of quantitative easing.

Recent reports on jobless claims and manufacturing point to slower growth in the world's largest economy. Figures showed that sales of existing houses plunged by a record 27pc in July.

"If we carry on with data like this, yes, it's coming . . . by October for sure," Mr O'Neill said, referring to quantitative easing.

Irish Independent

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