The Irish “Celtic Tiger” economy may not be growing as fast as it was a few years ago but it still seems in a fairly healthy state.

“The tiger is not galloping, it’s more of a quiet canter,” said one timber trader.

The Organisation for Economic Co-operation and Development (OECD) forecasts the current weak trend in Irish economic growth to continue for the rest of the year, with partial recovery in 2004.

It believes GDP growth will slow to 3.25% this year, before rebounding to 4.25% in 2004. But these figures still considerably outperform other EU member states.

The OECD expects housing investment to remain buoyant this year and next but warns the economy is vulnerable to a further appreciation in the euro and geopolitical risks.

Government spending cutbacks have had a big impact on industry but there is talk of the government trying to change the common finance pact so it can borrow more money to fund capital programmes.

Property investment

One source expressed concern that Ireland might “talk itself” into a recession – something he believed was possible with a population of only 3.9 million people. But construction is still “very, very strong” and property investment was up in the first quarter.

Dry weather for the past two months has meant good access in the forests and strong building activity although with the lack of rain some fires have occurred in Coillte‘s forests and on privately-owned lands.

Coillte reports good demand for all products. A total of 1.26 million m3 has been offered at the nine auctions to date, with 1.105 million m3 contracted. This is about 130,000m3 more contracted sales than the same time last year.

One timber merchant said: “We’ve had a good start in the first quarter but it has been easing off a bit. There is a bit of caution creeping into the economy and the price of housing has peaked out, mainly in Dublin.”

The ice situation in the Baltics has eased now and there is concern that a return to normal volumes may saturate the market. One contact agreed that there is a risk of carcassing timber flooding the market soon.

There is some concern about wet timber being shipped in from the Baltics. A load of 1,000m3 was reportedly discovered at Cork recently. Both the Department of the Environment and Homebond, which offers structural guarantees, are looking into this.

Also, some buyers have been reportedly bringing in undersized timber, which is affecting companies’ 5% bottom line.

“There are importers out there who are undermining the trade by these practices,” said a source

Decking boom

Another merchant said business was “brisk” but it had slowed down. He said the market is proving competitive, with customers becoming more price and service sensitive.

The source said there was some talk of the housing market slowing down, but he believed if it did it would be in the “outer ring of Dublin”.

He predicted that decking would continue its boom, adding: “Everybody wants to have a barbecue. They want a mediterranean lifestyle.”

COFORD agrees that decking has a bright future, despite some voices predicting it will experience a downturn.

It says building activity in Ireland was still phenomenal. “It’s absolutely incredible”, said a spokesperson, “we have by far the most active housing sector in Europe.”

The timber frame sector is looking very healthy, which means more business for timber studding and OSB, which is increasingly displacing imported plywood.

External cladding is described as extremely buoyant, with it being featured in an increasing number of new apartment blocks. Western red cedar is the most popular species, with some volumes of home-grown larch and Douglas fir also being used.

Five years ago it was a rarity to see such cladding on buildings but now architects, fuelled by buzz phrases such as ‘lifecycle analysis’ and ‘energy efficiency’, are switching on to it.

Back in March, traders voiced some concern about the potential consequences of war in Iraq. Now that fighting is over the feeling is that there was some impact, but not a major one because of the shortness of the campaign.

The soaring euro, which recently reached a four-year high, could pose a problem for exporters.

Forestry review

Unemployment is hovering at about 4% and there has been an influx of returning emigrants, plus new immigrants from eastern Europe. Now that many eastern European countries are EU member states, their people have working rights in Ireland.

Growing cutbacks in funding and further environmental and regulatory restrictions have prompted the Irish Forest Industry Chain (IFIC) to commission a review of Ireland’s forestry sector and its contribution to the country’s environment and economy.

IFIC chairman George McCarthy recently said the enlargement of the EU would increase competition in the key European wood products markets, specifically the UK, where the vast majority of Irish panel products are sold.

He said the reduction in government funding for the expansion of the forest estate had dealt a serious blow to attaining the critical mass of production as outlined in the government’s 1996 strategy.