OECD warns of mortgage arrears and sovereign debt risks

High mortgage arrears remain a “significant problem” for Irish banks and the economy at large, the Organization for Economic Co-operation and Development has warned.

The Paris-based OECD has advised the government to consider using UK-style “possession bans” to help asset recovery and boost repayments.

In a survey of the Irish economy released today, the OECD also warns of housing, healthcare, pension and climate costs, which it says could push up debt in the future.

“The economy has weathered the COVID-19 pandemic and is coping well with the impact of Russia’s war of aggression against Ukraine,” the survey said.

“However, fiscal policy faces a number of pressures in the short term and in relation to its longer-term sustainability.”

The OECD has previously predicted the Irish economy will slow sharply to 0.9 per cent next year as rising prices hit household incomes.

It comes after brisk modified domestic demand growth of 8 percent this year, a move wiping out the multinational sector.

Inflation is expected to average 8.4 percent this year and remain high at 7.2 percent next year before slowing to 2.9 percent in 2024, the OECD said.

Core inflation – excluding volatile food and energy prices – will remain close to 5 percent through 2023.

Gross domestic product – which includes the multinational sector – is expected to grow 10.1 percent, faster than expected, the Paris-based OECD said in November, more than double the previous rate but falling to 3.8 percent in 2023.

The 2022 figure is well ahead of Irish and recent EU forecasts for the year and places Ireland at the top of the 38-member OECD rankings in 2022.

In 2024, modified domestic demand is expected to recover to 3.1 percent, similar to the broader GDP forecast of 3.3 percent.

Ireland’s GDP growth is ahead of the global economy, which is set to slow to 3.1 per cent this year and 2.2 per cent next year, and recover slightly to 2.7 per cent in 2024 – well below pre-war forecasts.

However, problems with the housing supply are putting downward pressure on prices and could exacerbate urban labor shortages, according to the OECD.

She called on the government to “further stimulate demand” through purchase assistance programs and said the central bank’s easing of lending limits should be “closely monitored”.

Meanwhile, the OECD said healthcare spending – particularly for patented versus generic drugs – could be more efficient. And it said targets for transport, buildings and other emissions might need to be increased because of less ambitious targets for agriculture.

https://www.independent.ie/business/budget/oecd-warns-of-mortgage-arrears-overhang-and-public-debt-risks-42218608.html OECD warns of mortgage arrears and sovereign debt risks

Fry Electronics Team

Fry Electronics.com is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – admin@fry-electronics.com. The content will be deleted within 24 hours.

Related Articles

Back to top button