Judge ye not (or not yet anyway)

DOCTOR Johnson once wrote: "Even God doesn't plan to judge a man 'til the end of his days. How can I?" Economic punditry forces us to sometimes judge a little too quickly. This column looks at an area where some forbearance needs to be exercised: forecasts of Ireland's growth rate and Ireland's debt dynamics.

Growth rate forecasts are estimates. Treat them as such.

Last week saw the downward revision of the International Monetary Fund's growth forecasts for Ireland from 0.9 per cent to only half of one per cent this year. The revision recognises Ireland's economy is slowing, but it has been jumped on by all and sundry as evidence that Ireland's recovery is necessarily doomed.

The key issue is the ratio of nominal output growth to the cost of debt servicing, given our level of indebtedness. When we grow strongly, we can pay down our debt. When we don't grow as an economy, but our debt does, we are in deep trouble.

Read the rest in the Sunday Independent.