THE Irish prime minister, Enda Kenny, had good reason to feel bullish as he headed towards Dublin's docklands to open the new offices of Arvato Finance, a German payments company, last September.

It would be the second time in a week he had stood alongside an international executive to announce the creation of hundreds of jobs in Ireland.

Two days before, he had welcomed Peter Moore, chief operating officer of Electronic Arts, one of the world's biggest electronic gaming companies, as it pledged to create 300 posts at its European service centre in Galway.

And:

Ireland has staged a "remarkable economic renaissance" since 2011, when Kenny took power, according to Capital Economics, the consultancy. The government's deficit has fallen from more than 13% of GDP to a forecast 8% in 2013 and the country is expected to be out of its international bailout programme by the end of the year.

Positive signs have also been emerging from the eurozone's southern periphery, where Greece, Portugal and Spain have all enjoyed a dramatic improvement in their balance of payments over the past year.

So did 2012 see "the worst of the crisis pass", as Kenny claimed when he accepted Ireland's six-month presidency of the European Union this month? Or is this just another lull before the next eurozone storm?

And:

"The current account positions of southern eurozone countries have improved dramatically and they could be running sustained surpluses before too long, which is certainly encouraging," said Ben May, European economist at Capital Economics.

The Greek current account deficit is likely to average about 3.5% of GDP in 2012, against 10% in 2011 and 15% in 2008, reckons Capital Economics.

Portugal, Spain and, to a lesser extent, Italy have also enjoyed big improvements. Ireland is forecast to record a 3% surplus for 2013 - something Britain can barely hope for.

Export growth in Spain, Portugal and Ireland has been better even than in Germany since the end of 2011. Firms have used a fall in labour costs and the weakness of the euro in the first half of last year to boost their competitiveness.

"In the past two years, peripheral current accounts have improved markedly, even adjusting for cyclical factors," said Huw Pill at Goldman Sachs. "As a result, the real exchange- rate depreciation required to achieve external balance in these economies has decreased substantially on estimates, but a substantial rebalancing is still needed."

David Fuller's view Obviously Eoin Treacy knows considerably more about Ireland than I do, by virtue of living there, but he also feels "too close" to comment regularly on some aspects of Ireland's economic situation.

This is a wise assessment, in my opinion, not least because locals within any country will have considerable experience of the economic problems and social stresses, which can easily compromise perspective, not least regarding the overall trend of developments.

Ireland and the Southern European countries are arguably experiencing depressions, reflected by slumps in GDP and property values, plus high unemployment. Levels of indebtedness are also high and imports are low. However, this latter factor is reversing the previous current account deficits. More importantly, the crisis in borrowing costs has been dramatically reduced by the ECB. To see this most clearly for Ireland we now need to look at their 8-Year Government Bonds because there have been no further long-dated issues and the old 10-Year bonds now have 8 years remaining to redemption. Recent issues have been of shorter duration. Note also: there is a thin trading gap on the chart shown, mostly in 2009, and a couple of downward spike errors in 2010. However, I believe the advance from just above 4% yields, to an accelerated peak in July 2011 just below 16%, and the subsequent decline are all correct.

Manageable funding costs give Ireland and the Southern European countries some economic breathing space and their governments are lobbying for some debt forgiveness, or at least preferential borrowing terms, as we have seen for Greece. Significantly, the building blocks for eventual sustained recoveries are moving into place. I should add - provided there are no shocks, such as interest rate spikes or surging energy costs over the next year or two.

The outline details for more preferential borrowing terms are in this informative article from the Irish Times, supplied by Eoin. Here is the opening:


European Union Economic and Monetary Commissioner Olli Rehn said today Ireland and Portugal could draw on a European Central Bank bond-buying programme to help them become the first bailout countries to be weaned off official aid and move back to market financing.

"The option of combining a precautionary program with the ECB's outright monetary transactions is something that should not be ruled out, and is one option that should be considered as a way of smoothing the way for a successful return to market financing," Mr Rehn told reporters after a meeting of EU finance ministers in Brussels today.

In a further concession, Mr Rehn said he favours giving Ireland and Portugal more time to pay back bailout loans, extending to them the same treatment granted to Greece last year. Any decision by the ECB to deploy its as-yet unused unlimited bond-purchase facility would rest with the independent central bank, he added.

Lastly, I will continue to give these troubled economies the benefit of the doubt, while their bond yields remain low and their stock markets are steady. The current evidence is encouraging, as you saw from Irish bond yields above and can also see from this chart of Ireland's ISEQ Overall Index, which trades at an historic PER of 17.34 and Yield of 2.63%.