Why the Irish economy is so resilient
An analysis of Ireland’s growth data shows that Ireland’s GDP grew at a faster rate than most other OECD countries during the financial crisis, and remains on course to post its strongest growth figures since 2009.
However, the Irish government’s insistence that growth figures are meaningless as it struggles to meet the EU’s austerity measures is also putting its finances under pressure.
The government is facing a barrage of criticism over its handling of the crisis and austerity measures, which have led to an exodus of the country’s biggest companies and the imposition of steep new taxes on the wealthy.
Ireland is a major contributor to the EU budget and a key member of the eurozone’s bailout programme.
In recent weeks, the government has been under pressure to explain how it came to the decision to reduce Ireland’s contribution to the bailout.
The figures were released by the finance ministry on Monday and will be used by the government to support its budget plans.
The figure is calculated as the difference between the government’s forecast GDP growth in 2020-21 and the actual figure.
The analysis shows that, despite the recent downturn, Ireland’s economy is expected to grow by 2.5pc in 2020.
The report showed that the economy grew by 2pc in the past three months.
This is significantly faster than the average growth of 2.3pc in Ireland during the period.
However it is still behind other eurozone countries, including the UK, France and Italy, which are all expected to add 0.4pc to their economic growth figures.
The analysis found that while the Irish economic recovery is a result of the EU-wide measures, it is also a result in part of the economic policies adopted by the Irish state.
Ireland has been part of a broad package of austerity measures adopted by successive governments to combat a banking crisis and a drop in the value of the Irish pound.
These included the imposition on businesses of a 20pc levy on bank earnings, a reduction in corporation tax and a reduction of the tax rate paid by companies on profits and salaries.
These measures, combined with a weaker currency and a falling population, has led to a reduction to the size of the economy.
The government also announced new measures to tackle tax evasion.
This was partly due to the implementation of a new tax code, which requires multinational companies to file their tax returns in Irish.
However the new tax system has also raised fears of a return to a tax regime that was introduced in 2008 when the financial crash struck the country.
In contrast to the economic downturn, the financial sector was also doing well in recent months, as more companies and individuals opened up bank accounts.
The financial sector has added jobs and increased revenue for the government.
Irish unemployment fell to 8.7pc in September and the economy is forecast to grow 2.6pc in 2019.
The country is also predicted to see its unemployment rate rise to 6.5% in 2019 from 6.1pc last year.
Ireland’s unemployment rate peaked at 8.1 per cent in the first quarter of 2017.
The number of people seeking work fell to 5.4m in the third quarter of 2019 from 5.6m in August.
It has also been noted that the Irish public debt is lower than in many other European countries.
This was partly driven by the fact that Irish public spending on public services is more heavily financed by the public purse, rather than the private sector.
Despite the low unemployment rate, Ireland still faces serious challenges.
According to the Irish Times, a recent survey by the Resolution Foundation, a think tank, found that Ireland is facing serious headwinds.
The survey found that only 19 per cent of Irish people think the country will survive the current economic downturn.
The same survey found 55 per cent believe the economy will slow or even slow to a halt by the end of this year.
The Resolution Foundation also said that more than two-thirds of Irish households are likely to fall into poverty over the next four years.
“We mustn’t let the crisis scare us off from doing the right thing,” the president of the Ireland Chamber of Commerce, Eoin McNeilly, said.
“We know that if we do nothing, we will see a return of the worst economic downturn since the second world war.”
However, Ireland has also seen some positive economic indicators.
An improvement in unemployment was welcomed by the Taoiseach Enda Kenny and Finance Minister Michael Noonan.
However the new figures suggest that Ireland has more work to do in tackling the recession and is unlikely to emerge from the crisis unscathed.
More to come.