Monday, August 15, 2005

The Irish economy would not be face a "calamitous collapse" if oil prices reached US $100 a barrel, according to Davy Stockbrokers


The report, which plays down some recent commentary suggesting that Irish economic growth would be jeopardised because of high oil prices, also says that even with current prices and the trend of higher interest rates, economic growth will remain strong.

The report from Robbie Kelleher and Rossa White said media coverage last week hinted that the rise in oil prices to date had reached a point where it might seriously impair the performance of the economy.

"Clearly, oil prices at the USD85 or USD100 a barrel level would probably cause one to revise down forecasts for growth in the Irish economy, but we would still be a long way from foreseeing the calamitous collapse which some media reports already suggest is imminent."

The impact of rising oil prices could be seen in the rise in the CPI for July, but said that "other inflationary influences appear to be exceptionally benign. In addition, nominal incomes are rising at around 5pc, numbers in employment are increasing by close on 4pc, and income tax rates have been reduced.

"Hence, in spite of the 50pc increase in oil prices, real spending power in the Irish economy will improve significantly this year."

Rude health of economy should offset oil fears


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