EMBRACING IRISH EMERGENCE
Monita Pesumal analyses Ireland’s economy and uncovers a host of reasons for its recent successes
Despite the financial meltdown of 2007/08, the Republic of Ireland has emerged as the world’s 25th largest economy. It’s one of the most open and export driven economies in the world – and a wealthy, net exporting nation.
Before the wheels of the economy began turning in 2021, the performance of the Irish economy had slowed down for five years prior to that. Driven by the continued growth of pharmaceutical and medical technology exports however, it picked up pace to claim a spot as one of the strongest economies in the Eurozone.
Ireland’s economic freedom score is 82, making it the third freest on the planet. The republic is ranked second among the 45 countries in Europe, after Switzerland. Last year, Ireland did well to add 80,000 mostly high paying jobs, saw income tax collection rise by 16 percent and recorded bank deposits for a household nearing € 70,000.
Ireland’s GDP is expected to continue to grow with the same momentum to 3.8 percent this year and 3.1 percent in 2024. Income inequality has fallen by eight percent in recent years, thanks to a substantial increase in the baseline national minimum wage.
What’s more, Ireland has also been doing well in promoting gender equality, ranking ninth in the World Economic Forum (WEF) Global Gender Gap Index ahead of France, Denmark, Germany and the UK. And it was ranked 24th out of 137 nations in the WEF Global Competitiveness Index last year.
However, the report highlighted the need to improve infrastructure and productivity, and cut bureaucratic red tape on businesses.
Although blessed with lush green pastures, arable plains and rich farmlands, Ireland’s economy is service driven. There are a whopping 15 Irish brands mentioned on the 2022 Forbes Global 2000 list, which ranks the largest businesses in the world using four metrics – viz. sales, profits, assets and market value.
For instance, the Dublin-based Accenture offers management consultancies, technology and outsourcing services, and employs more than 720,000 people. It is also heralded as one of the world’s top female friendly organisations.
Another success story comes from the Kerry Group, which is a world leader in the manufacture and distribution of food and beverages. And moving on to banking, the Bank of Ireland enjoys the prestige of being one of the world’s oldest and best banks. It generated a revenue of US$ 8.4 billion dollars in 2022.
Ireland’s natural resources stem from its mountainous region in the west, and include gas, petroleum, peat, copper, lead, dolomite, limestone, silver and zinc.
Some 20 percent of the labour force is employed in the country’s key industrial sectors – brewing, fishing, foresting, mining, agriculture, pharmaceuticals, chemicals, and computer hardware and software.
It exported record levels of food and drink last year with dairy leading the way in the former category. The value of Ireland’s food and drink exports amounted to 18 billion dollars – a 22 percent increase year on year. The UK was the largest single market for Irish food and drink exports for the period.
There is a school of thought that Ireland was the biggest winner to emerge from Brexit. For instance, there were investors who wanted to quit the UK but retain access to the EU. Many countries offered stable economies, geographical proximity to customers and solid infrastructure – but Ireland ended up as the destination of choice for these businesses.
The cultural similarities between the two nations enabled a smooth transition. It has the advantage of being the only European market that’s a member of the EU, remains a member of the Eurozone and is English-speaking.
Although English is widely spoken across Europe, the fact that it’s the main language in Ireland means that complications arising in many mainland European destinations don’t exist in the republic.
Thanks to the Common Travel Area (CTA) arrangement between Ireland and the UK, the former has offered businesses the opportunity to relocate with as little disruption as possible. British citizens are entitled to live and work freely in Ireland with no restrictions.
And in comparison with other European countries such as Portugal, Germany and France, Ireland offers a much lower corporate tax rate of 12.5 percent.
Alongside managing the impact of the COVID-19 pandemic, key priorities for the Irish government are economic recovery, job creation and retention, healthcare reform and housing. There is also the added pressure of handling rising inflation due to soaring energy costs as a result of the war in Ukraine and other global market factors.
Unemployment before the pandemic had reached a record low of 4.8 percent in February 2020 but hit a high of 28.2 percent in March 2020 due to pandemic-related unemployment. However, the Irish economy kicked back with unemployment falling to a low of 4.3 percent in December 2022.
The government has launched a major reform of the healthcare sector to boost spending efficiency, reduce waiting times and simplify the system, all of which are imperative for improved performance and long-term sustainability.