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Country Risk Service Ireland 1st Quarter

  • ID: 2138970
  • Country Profile
  • February 2017
  • Region: Ireland
  • 21 Pages
  • The Economist Intelligence Unit
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The Economist Intelligence Unit expects the primary surplus to narrow margin-ally, to 1.3% of GDP, in 2017. However, the public debt/GDP ratio will remain on a declining trend, falling below 75% by the end of the year. Funding costs have risen, in line with global trends, but are still low and are likely to remain so.

The euro's depreciation against the US dollar since Donald Trump's election as US president has revived talk of it breaching parity against the dollar, but it has rallied off its lows in the new year. Uncertainty about the outcome of the French presidential election in April-May could test the euro's resilience to shocks. Although interest rate differentials favour the dollar, the ECB is likely to start tapering its QE programme in 2018. This might buoy the single currency, which will continue to derive structural support from a large current-account surplus (4% of GDP in 2016).

Banks' balance sheets continue to benefit from the economy's recovery and rising house prices, which increased by an average of 8.6% year on year in November 2016. The non-perform-ing loan ratio fell to an estimated 14% in June 2016-down from 19% at the start of the year but still uncomfortably high. The government is preparing for the sale of Allied Irish Banks, but the process is likely to delayed by the bank's poor performance in stress tests.
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Country Risk Service Ireland 1st Quarter

Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk

Definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk

Sovereign risk
Current assessment
Rating outlook

Central scenario for 2017-21: Political stability

Central scenario for 2017-21: Election watch

Central scenario for 2017-21: International relations

Central scenario for 2017-21: Policy trends

Central scenario for 2017-21: Fiscal policy

Central scenario for 2017-21: Monetary policy

Central scenario for 2017-21: Economic growth

Central scenario for 2017-21: Inflation

Central scenario for 2017-21: Exchange rates

Central scenario for 2017-21: External sector

Key risk indicators

Ratings summary

Quarterly indicators

International assumptions summary

Economic structure

Public finances

Exchange rates, interest rates and prices

Financial sector

Current account

Foreign payment and liquidity indicators

External trade
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