Weekly Market Insight

Latest Economic & Market Update 17th December 2020

18th December 2020

Good afternoon, it is December 17th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • Significant disparity in the economic impact of the Global Financial Crisis & Covid-19 in the Irish economy – ESRI
  • Tourism Ireland CEO hopes foreign visitors will resume travel to Ireland between April and June

The two recessions to hit the Irish economy this century have significant differences according to ESRI. Although the economic shock of the Covid-19 pandemic this year is more severe than the GFC, the rebound is more rapid than the gradual and prolonged downward movement of the GFC. Another striking difference has been policy response at national and European level. The fiscal support this year of domestic pandemic unemployment payments and business support measures, as well as the ECB’s €1.85 trillion bond buying programme, is in stark contrast to the years of austerity and cuts in government expenditure post-GFC. A primary driver in this fiscal response is accommodative monetary policy and ECB’s key interest rates near and below zero. “These lower borrowing costs have created additional fiscal space for the Irish Government to fund the large deficits that will be run in 2020 and 2021,” said the ESRI. “On the other hand, in the early phase of the GFC, the ECB’s monetary policy was much more conservative and the yields on Irish Government debt were substantially higher, peaking at over 10 per cent as private markets shunned Irish debt.” BlackBee believes that this accommodative monetary policy will lead to credit passing into Irish businesses in 2021 and create the opportunity for real asset investment strategies. (Sources: ERSI, Irish Times)

Niall Gibbons, CEO of the all-island body Tourism Ireland, is hopeful that international tourism will restart in Q2 2021. Tourism Ireland has developed a “push the green button” campaign which will try to convince potential visitors to book a trip to Ireland. A final launch date of the campaign will be decided in January as the tourism body assesses the public health situation in the country. Speaking to The Irish Times, Mr. Gibbons said “We will make a call on it in January, so let’s see what happens. If the campaign is activated we will run it around St Patrick’s week. We will take close advice from [other arms of the State] before we make the decision. This is not a call that will be made in isolation inside Tourism Ireland.”. In 2019, non-residents on trips to Ireland spent over €5 billion in the country. North Americans on holiday/leisure trips were the largest contributors spending just under €1.3 billion. For trips that were business orientated, Great Britain residents were the highest spenders with €220 million. Oxford Economics estimate the EMEA travel and tourism sectors will return to their pre Covid-19 levels in 2024. (Sources: Irish Times, CSO, Oxford Economics)

Best & Worst Performers of Large Cap US Stocks on Wednesday
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Global Market Update
(as at close of markets 16/12/2020)