Well, it’s been another manic week for the Someplace Else Dublin office and another depressing week for those reading Irish newspapers. “Economy Set to grow at slowest rate for two decades” is the headline in today’s Irish Times. “Growth to Plummet as Economy Slows” reports the Independent. The Examiner leads with poor Bertie struggling to explain how €50k got into a bank account he forgot to tell us about. You’d think the journalists would at least try to find something to put us in a good mood for Paddy’s weekend.
Never been a better time to invest elsewhere
In fairness to our business writers, they’re a moody bunch, but they’re usually right. Growth is down, inflation is up, property prices are flat or falling, unemployment is rising, the weather is terrible and our Toaiseach is a crook. Let’s look at this another way – there’s never been a better or more appropriate time to get your investment money out of Ireland and into a country with more optimistic growth prospects.
My colleagues and myself could talk to you all day (and we’re happy to do so) regarding countries that are heading in the opposite direction to Ireland, UK, Spain and the US. Emerging markets have now gotten so big and powerful that they no longer need a strong United States to grow their economies. Domestic consumption in emerging economies is now rising three times faster than consumption in the developed world. Investment is even better according to HSBC, with capital spending up a massive 17% in emerging markets compared to 1.2% in rich countries.
How about this one - the four biggest emerging economies, which accounted for about 40% of global GDP growth last year, are the least dependent on the USA. Exports to America account for just 8% of China’s GDP, 4% of India’s, 3% of Brazils and 1% of Russia’s.
Unfortunately you don’t read these kinds of articles in Irish newspapers and you certainly won’t hear about them in the RTE evening news; you’ll have to look at something like The Economist.
Where might you want to look?
So, if any of our readers are interested in investing their money outside Ireland, but not too far away, then you could do a lot worse than spend a few hours this weekend studying Romania. It is easily our most popular destination, and is in my opinion the most exciting market in Europe at the moment. Would you like ten reasons why?
- A stable financial system and 75% LTV mortgages available for foreigners
- Realistic rental yields of 7-7.5% - your rental income is higher than mortgage payments from year one.
- Annual capital appreciation of 20-25% for years to come
- Little exposure to global credit defaults (2-3% of their GDP is mortgage debt compared to 30-40% in Ireland/UK/US)
- A booming economy - 7.7% last year
- Attracting billions of euro of high value jobs - the country is home to most of the major multinational technology companies
- €31 billion of EU infrastructural development funds in next 5 years
- 4.6% unemployment (compared to 17-19% in Poland)
- Huge gap between the supply and demand of new residential and commercial property
- A stable and ambitious government who realise their country is exhibiting all the signs of a tiger economy.
What can countries do if the developed economies continue to slow?
If the worst happens, Someplace Else investors may be comforted by the fact that most emerging market economies now have large current account surpluses and large foreign reserves, meaning that for the first time ever, developing markets can make full use of monetary and fiscal policy to cushion their economies if the developed countries economies continue to slow.
Unfortunately for Mr. Cowen, our Finance Minister who is in charge of our large current account deficit, our tiny foreign reserves and who has little or no control over our monetary and fiscal policy, no such get out clause exists. Who can blame the poor man for heading off to Kuala Lumpur for the weekend; he’d be too depressed by the headlines if he stuck around.
Enjoy the bank holiday folks.
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