Why Irish Eyes Are Smiling
In economic terms, there was scarcely a part of the world unaffected by the economic crash of 2008. The ripple effects were truly global though some countries fared worse than others. Ranked highly on all lists of countries most affected is Ireland. In fact the impact on Ireland was made far worse by circumstances because up until 2007, Ireland were settling in to their strongest economic period in history; what was known in the press as the Celtic Tiger. To put it in individualistic terms, pride came before the fall. There may have been a certain amount of hubris involved in Ireland’s eventual crash, not least by the developers and bankers who had only seen their fortunes grow consistently for the previous decade. Regardless of whether mistakes were made on high, the consequences were suffered in the trenches. Unemployment grew from an almost negligible 4% in 2007 to a whopping 15% in 2011. Construction stopped, spending stopped, young people fled for greener pastures, and overseas investment faltered; waiting to see what would rise from the ashes.
So how are conditions for business in 2015?
Before getting into the facts of figures of the current state of the Irish economy, it should be established that all growth percentages should be put in the context of a very low base level. So while there is much positivity to be garnered from the following information, it is important to remember that it is still early days economically. That being said, here are the reasons Irish eyes are smiling!
Ireland’s Economy Consistently Grows Faster than Predictions
The International Monetary Fund (IMF) are now forecasting a 3.9% rise in GDP for 2015, up 0.4% on previous predictions. They are also forecasting growth of 3.3% for 2016 again up on earlier predictions. These figures put Ireland in pole position for economic growth in the Eurozone, a situation that has felt unlikely to its citizens for a number of years. So what is driving all this growth? Well a number of political initiatives have seen a resurgence of investment, with business spending on machinery and equipment up 30% last year. Pharmaceutical exports have fared particularly well with a marked increase in employment in this sector. 2015 also saw an increase in consumer confidence, particularly reflected in the automotive market, although the services sector is still showing some contraction as post-recession pragmatism continues to endure.
Will this Growth Continue?
The upshot of all this is that the government is likely to have approximately 1.5 billion available to return to the economy in the upcoming budget. Given that an election is on the horizon and it would be understandable to conclude that this money is likely to be spent on tax cuts, social benefits, and other things that will further buoy the spirits of the Irish citizenry. When you had the accelerated reduction in the unemployment rate (due to drop to 8.8% next year) it would seem that magic ingredient of consumer sentiment should at least be positive in the short term. Indeed perhaps some new found pragmatism in terms of finance will imbue some stability into the Irish economy that we retrospectively know did not exist during the boom years.