The economy is not likely to suffer major setbacks even if political uncertainty continues, says Davy Stockbrokers
Worries that an unclear election result would cause trouble for Ireland on the international markets appear to be unfounded.
Even with no clear coalition on the horizon, and talk of a minority Fine Gael government, trading on the Iseq index of Irish shares and 10-year government bond yield has seen little change.
The Iseq dipped slightly after opening on Monday but is up .39% since Tuesday morning, while bond yield lowered to .8% on Monday, it lowest level in almost a year.
Moody's rating agency said it would continue to observe attempts to form a government, but is most concerned about fiscal policy.
“The authorities continuing to commit to a strong pace of fiscal consolidation would remain positive for Ireland’s Baa1 rating,” the agency said.
Davy Stockbrokers predicted political uncertainty could last months under a minority government, even leading to another election by November's budget. However, the firm does not believe the economy will be greatly affected.
“A key point is that Irish GDP growth remains largely export-led, with consumer spending only joining in the recovery over the past 12 months … Similarly, investment spending has come predominantly from the multinational sector, with SME bank lending contracting sharply in 2015”, its report said.