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Tuesday, 16th April 2024
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Moderate optimism in finance, despite US slowdown Back  
The financial services industry faces an ‘interesting’ year, as uncertainty in the international economy centres on the United States itself. Irish concerns are particularly acute, given the close connection between the Irish economy and US high tech industry. This month’s edition of Wired magazine carries an article describing Ireland as an offshore ‘aircraft carrier’ platform for the US software industry in Europe.

Concerns in international financial services and the IFSC are less acute however than they are for high tech industry, because the US financial services industry - along with other sectors, such as oil and gas, is turning in a robust performance in the equity markets compared with many tech and communications companies - notably those with the letters ‘com’ in their name.

Where finance has been cautious has been in e-finance and internet banking, which, like other sectors, is being seen as a truly new industry where long and hard graft will apply before rewards are reaped. A financial services casualty has been enba in Dublin, and certain internet banking and financial b2c internet ventures are showing that rewards are far further in the future than many had imagined, on the basis of the much vaunted but by now over-hyped ‘first mover advantage’.

The second sphere of concern arises from the secondary impact of overlending, falls in the savings ratio and over-expansion of credit, either in the cars/consumer durables market, or property.

Some are more bullish on Irish performance than others. Colin Hunt, economist with Goodbody Stockbrokers doesn’t expect a hard landing. He does say however that if a significant slow down materialises in the US a couple of percentage points would have to be lopped off the forecasts for Irish growth this year.

Likewise on the outlook for Irish property Hunt is optimistic and forecasting a 12 per cent increase in 2001. ‘The key issues for policy makers in the US are avoiding the economy crashing to a halt. I believe they have the room for maneuver to achieve this through monetary policy.’ However others, for example, Lisneys don’t see any growth in the top end of the property market in particular.

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