ESRI Forecasting accuracy: Some track record

Buyer Beware on latest government uptalk re: 50,000 jobs predicted by ESRI…

Broad comment and criticism of ESRI:

Buck Stops Here – Irish Independent, June 2010

The ESRI forecast record (Community Comments) – The Irish Economy Blog, June 2010

ESRI is full of S***: Official – Dublin Opinion Blog/Dr. Conor McCabe, July 2010

Leprechauns And Confidence Fairies – Paul Krugman, New York Times, July 2010

ESRI has been getting its forecasts wrong for years – David McWilliams, September 2011

Our deluded ESRI – Village Magazine, 2011:

It’s therefore unsurprising the peer review offers no clue as to the origins of the grossly inaccurate MTR 2008-2015, instead congratulating the institute on its “enviable reputation”. TCD economist Kevin O’Rourke struck a different note when he wrote in the Sunday Business Post that “no-one outside the country is taking them seriously any more”.

How have all those predictions of “Green Shoots”, “Turned Corners” and “improvements” actually worked out up to now?:

For 2013

ESRI predicts 1.8pc growth this year, urges Government to continue with austerity – ESRI overoptimistic on economic growth? Private sector goose cooked? 2013

Irish economy unexpectedly contracts in setback for Government – Irish Times, March 2014

Preliminary figures from the Central Statistics Office (CSO) showed gross domestic product (GDP) contracted by 2.3 per cent in the fourth quarter and by 0.3 per cent for the year [2013] as a whole.

For 2012

ESRI predicts growth of 2% in 2012

According to O’Brien “Three months ago, the ESRI believed gross domestic product (GDP) would grow by 1.5 per cent this year. While other analysts have been in a race to the bottom recently, slashing their growth predictions, the ESRI’s forecast has jumped to 2 per cent. This is four times the rate of expansion predicted by the IMF’s gloom-mongers in Washington and more than twice the rate anyone else is predicting.
Among many eye-catching proposals, Durkan, and by extension the ESRI, wants an even bigger budgetary adjustment than the four-year, €15 billion package the Government is implementing. Central to this, he said, should be public sector pay cuts. His ilk is overpaid, he opined, and when asked, said he would take a 20 per cent salary cut. He also believes the State’s capital spending (money invested in roads, schools and the like) cannot be justified and needs to be cut further.

Ref: Quarterly Economic Commentary, Spring 2011

Irish Economy: GDP up 0.9% in 2012; US MNC tax moves raised computer services exports by 15% –, March 2013

Irish Economy: Preliminary estimates indicate that GDP (gross domestic product) in volume terms increased by 0.9% for the year 2012, according to the CSO. This is the second year in succession in which GDP showed an increase over the previous year following three years of declines in GDP during 2008 to 2010. GNP (gross national product) showed an increase of 3.4% in 2012 over 2011 – – this data is distorted by foreign firm activity. Net exports rose and benefited from a 15% rise in ‘Computer services’ exports mainly reflecting the tax strategies of US multinationals (MNCs). A downward revision to a 0.4% contraction in Q3 and marginally negative GDP growth in Q4 mean that the economy is technically back in recession…

GNP, which is regarded as a better measure than GDP of the overall economic performance, has been distorted since 2012 by transactions involving foreign companies that have relocated their headquarters to Ireland. The overseas profits of such a firm that is headquartered in Ireland are included even if all of the shareholders are foreign. In relation to portfolio shareholders (ie holding less than 10% stake), GNP is then reduced when dividend payments are made to shareholders. So, GNP can be temporarily boosted if such a firm chooses to retain earnings rather than pass along earnings to shareholders through dividend payments.

For 2011-2012 (In 2010)

ESRI predictions January 2010
Ref: Spending splurge to spark the recovery Experts forecast years of growth as exports pick up – Irish Independent, Tuesday January 19 2010

The head of the country’s biggest think-tank said there would be a modest lift in the economy in 2011 followed by a period of “quite rapid growth”.

ESRI chief economist John FitzGerald said: “We will see a vigorous recovery in 2012.” He added that the economy could expand by as much as 5pc a year between 2012 and 2015.

Late last night, his comments were echoed by Dr Alan Ahearne, adviser to Finance Minister Brian Lenihan.

He claimed lower costs were already “kickstarting growth”. And in a special report, Bank of Ireland economist Dan McLaughlin forecast that a substantial increase in exports in 2012 would help a recovery.

The optimistic outlooks represent the first definitive sign that a recovery may not be far off and will come nearly two years since the country dipped into recession.

However, Dr FitzGerald warned that taxpayers should brace themselves for another tough Budget next year.

For 2009

“… ESRI predictions at various intervals relating to various indicators…” 2008/2009


> Spring 2008:
For 2009, we expect a modest recovery and foresee GNP growth of 3 percent.

> Autumn 2008
We now expect real GNP to contract by 0.7 percent in 2009.

> Winter 2008
For 2009, we expect GNP to fall by 4.6 per cent in volume terms.


> Spring 2008:
Employment growth should resume in 2009 and we expect to see an extra 24,000 net jobs created.

> Autumn 2008:
Employment is expected to fall…by 47,000 in 2009.

> Winter 2009:
We now expect that average employment will fall by 117,000 in 2009


> Spring 2008
The General Government deficit is expected to reach 1.2 percent on GDP.

> Autumn 2008
Based on figures from the Department of Finance, it appears that the general government deficit will be 5.5 percent this year. Our forecasts include a Budget for 2009 in which this same deficit holds in 2009.

> Winter 2008
On the public finances, we expect the General Government Deficit to be 6.9 per cent of GDP in 2008 and 10.2 per cent in 2009.

In 2007

ESRI predicts fall of 6% in house prices, Irish Examiner, July 2007

In 2003

ESRI forecasts soft landing for economy – The Irish Times, 2003

And here is their latest (drumroll, please):

ESRI: Irish Economy to grow at fastest rate since 2006. April 2014
Ref: Ireland is now back on a growth path, says ESRI – Irish Times

The Boom is back according to the ESRI… 2014

Any one making bets?

Remember: 1. Even dead cats bounce; 2. If you keep making essentially the same kind of prediction, eventually you get one right (“green shoots”, “turning a corner”); 3. 2006? Presumably because there was growth that year 8 years ago? 4. If, after 6 or 7 years of grinding down unemployment through emigration, and grinding down wages and returns through internal devaluation, you finally reach bottom… Try remembering all the warnings about becoming Iceland, again. Are we really glad to be “the good boys and girls of the EU”?

This entry was posted in Cutbacks / Austerity, Economy & Employment, Permanent Austerity Treaty / Fiscal Compact / Stability, Statistics and tagged , , , , , . Bookmark the permalink.

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