World Economic Climate Continues to Cloud Over
Feb 11, 2016
The Ifo Institute today released the results of its World Economic Survey (WES) for the 1st quarter 2016 (available here). The Ifo Index for the world economy dropped from 89.6 points to 87.8 points, signifying a further drift from its long-term average (96.1 points).
According to the report, the sharp decline in oil prices seems to be having no overall positive economic impact and growth in the world economy continues to lack impetus. While Assessments of the current economic situation brightened marginally, expectations were less positive than last quarter.
Since 1981 the Ifo Institute has conducted a quarterly survey in numerous countries on business cycle developments and other economic factors in the experts’ home countries. The January 2016 survey received responses from 1,085 experts in 120 countries including Chambers Ireland. A detailed regional analysis appears in the quarterly journal: CESifo World Economic Survey.
The results of this survey are concerning from an Irish perspective as it is yet another worrying international indicator. As a small open economy Ireland must be prepared for any future volatility in the international economy. Analysing the survey, WES experts are less positive about future economic developments in Europe than in Q4 2015 (see graph below). The findings in this report highlight the increasing challenge faced by the next Government, which will be tasked with providing a prudently managed economy.
The Chamber Network election manifesto, A Vision for 2021, calls on the next Government to implement strategic economic planning to enable sustainable economic growth. It is only through paying attention to international indicators and planning accordingly that the next Government will be able to ensure that Ireland can shed its status as an economy prone to high levels of volatility and boom-bust cycles and move to a more mature phase of economic growth.