AIB Group plc · EURONEXT:A5G

AIB — The Irish Economic May 2022

16 slides from AIB's investor presentation, May 2022

  1. Slide 1: The Irish Economic Update: Strong start to 2022, but inflation rising sharply

    The Irish Economic Update: Strong start to 2022, but inflation rising sharply May 2022 Oliver Mangan Chief Economist AIB 1

  2. Slide 2: Economy rebounded very strongly during 2021

    Economy rebounded very strongly during 2021  GDP grew by 5.9% in 2020, with GNP up 3.4%, but modified final domestic demand fell by 4.9%  Domestic economy picked up strongly in 2021  MFDD fell by 4% in Q1’21 but rebounded strongly as economy re-opened. Rose by 6.5% in full year  Consumer spendin

  3. Slide 3: Strong recovery continues in early 2022, though inflation surging

    Strong recovery continues in early 2022, though inflation surging  Indicators show very strong rebound in activity in 2021, which has continued in Q1 2022  Mfg PMI remained at strong levels in Q1 of this year; 57.8 in February and 59.4 in March  Services PMI very high at 61.8 in February and 63.4

  4. Slide 4: Activity indicators pick up strongly, but confidence hit again

    Activity indicators pick up strongly, but confidence hit again Source: Markit via Refinitiv Source: Refinitiv 4

  5. Slide 5: Unemployment declines rapidly, inflation rising sharply

    Unemployment declines rapidly, inflation rising sharply % 5

  6. Slide 6: Exports perform impressively throughout the pandemic

    Exports perform impressively throughout the pandemic  Ireland is a very open economy – exports, driven Exports as % of GDP by large scale FDI, are a huge part of economy Finland  Exports have risen strongly in recent years, helped UK Germany by large FDI inflows – though growth overstated France 

  7. Slide 7: House building held up in 2020-21, commencements surge

    House building held up in 2020-21, commencements surge  Total completions amounted to 20,500 in 2020, just Irish Housing Activity 2.6% down on 2019 level despite a 6-week lockdown  Commencements fell by over 17% to 21,700 in 2020  They have rebounded strongly over past year, hitting 35,000 by Mar

  8. Slide 8: House prices on sharp upward trend since end 2020

    House prices on sharp upward trend since end 2020  House prices declined sharply, by 55% over 2007-13  Prices have now recovered; just 2.5% below 2007 peak  CSO data show house prices little changed over 2019-20  Strong rise in house prices in 2021/early 2022, especially over June-Dec 2021, with

  9. Slide 9: AIB Model of Estimated Housing Demand

    AIB Model of Estimated Housing Demand  Rising headship rates added circa Calendar Year 2019 2020 2021 2022 2023 8,000 per year to housing demand in 2002-2011 period Household 31,000 22,500 20,500 23,000 24,000  Shortage of housing, high rents, Formation tighter lending rules saw average of which h

  10. Slide 10: Private sector deleverages, Gov. debt ratios resume downtrend

    Private sector deleverages, Gov. debt ratios resume downtrend % Irish Private Sector Credit (Inc Securitisations) as % GNI* 350 300 250 200 150 100 50 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Sources: Central Bank, CSO, AIB ERU Calculations % 1

  11. Slide 11: Public finances heading back into surplus

    Public finances heading back into surplus  Budget surpluses recorded in 2018 and 2019  General Gov budget deficit of €18.4bn in 2020, or 5% of GDP, as Covid-19 hit public finances  Strong rebound in tax receipts in 2021 – up 20% & 15% higher than 2019. Covid spending declined  Budget deficit muc

  12. Slide 12: Good economic growth to continue despite inflation surge

    Good economic growth to continue despite inflation surge  Key ingredients in place for continued strong growth by Irish economy, following sharp rebound in 2021  Very high Irish vaccination rates against Covid-19, with all restrictions on activity lifted in late January  Strong FDI inflows contin

  13. Slide 13: AIB Irish Economic Forecasts

    AIB Irish Economic Forecasts % change in real terms unless 2020 2021 2022 (f) 2023 (f) 2024 (f) stated GDP 5.9 13.5 6.0 5.0 4.5 GNP 3.4 11.5 5.0 4.0 3.5 Modified Final Domestic Demand -4.9 6.5 5.0 4.5 4.0 Personal Consumption -10.4 5.7 6.0 4.5 4.0 Government Spending 10.9 5.3 1.5 2.3 2.0 Fixed Inves

  14. Slide 14: Residual Brexit Issue Remains over NI Protocol

    Residual Brexit Issue Remains over NI Protocol  UK has not ruled out triggering Article 16 in dispute with EU over operation of NI Protocol  EU has offered concessions on Protocol. Discussions with UK continuing, but progress is slow  Triggering Article 16 would effectively suspend operation of N

  15. Slide 15: Changes to Corporate Tax Regime Agreed

    Changes to Corporate Tax Regime Agreed Importance of FDI:  Some 1,600 multinational companies are based in Ireland, accounting for over 250,000 jobs in direct employment  Corporation tax receipts of €15.3bn in 2021 or 22.5% of total tax revenue – over 80% comes from MNCs Changes to Corporate Tax R

  16. Slide 16: Risks to the Irish economy outlook

    Risks to the Irish economy outlook  Covid-19 remains a risk – still high case numbers, concerns about new variants  Restrictions could be re-imposed if there was a new virulent, vaccine resistant variant  Persistent high inflation could trigger very sharp tightening of monetary policy globally 

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