Thursday, 1 April 2021
Department of Finance
63. To ask the Minister for Finance the extent to which he expects the economy to remain competitive in the short to medium-term notwithstanding the impact of Brexit and the Covid-19 virus; and if he will make a statement on the matter. [17642/21]
67. To ask the Minister for Finance the extent to which he remains satisfied that Ireland remains an attractive location for foreign direct investment; and if he will make a statement on the matter. [17646/21]
69. To ask the Minister for Finance the degree to which he remains satisfied that economic progress can continue notwithstanding international turbulence; and if he will make a statement on the matter. [17648/21]
I propose to take Questions Nos. 63, 67 and 69 together.
Approaching the pandemic, the Irish economy was in a healthy position. Strong rates of economic growth had been recorded for a number of years, the labour market was effectively at full employment, while surpluses were recorded on the current account of the balance of payments and the government budget balance. While the negative effects of Covid-19 and Brexit are significant, these factors support the enduring competitiveness of the Irish economy.
While the domestic sector suffered a severe hit last year, the multinational sector has proven resilient demonstrating the competitiveness of Irish exports on world markets. Indeed, the IDA’s results for 2020 suggests foreign companies continue to value our FDI strengths. These include our talented and flexible workforce, a track record as a successful home to global business, and a hard-won reputation as a pro-enterprise jurisdiction.
As the global economy is experiencing the shock of the Covid-19 pandemic in a reasonably symmetric way, Ireland’s relative competitiveness on the international stage is not expected to be significantly affected. As a result, the recent series of surpluses in Ireland’s current account are expected to continue. The 2020 IMD World Competitiveness Yearbook ranked Ireland as the 4th most competitive country in the EU and the 12th most competitive country in the world.
In light of the vaccine rollout and the recovering international economy, the outlook for Ireland’s economy over the short-to-medium term has improved. For instance, the EU Commission is forecasting GDP growth of around 3 ½ per cent this year and next. However, there is a considerable degree of uncertainty surrounding the short-term economic outlook. The pace and extent of any economic recovery this year will ultimately depend on many factors, including the speed at which Covid-19 vaccines can be rolled out, the time it takes to suppress the current surge of the virus, as well as the impact of the UK’s exit from the EU on the Irish economy.
Equally, as a small open economy Ireland is particularly exposed to external risks, including the international development of the pandemic, the extent of permanent damage to the global economy – so-called “scarring” effects, as well as premature fiscal or monetary tightening. External risks will continue to be monitored carefully by my Department.
My Department will publish updated macroeconomic forecasts with the Stability Programme Update in April.