Investing in Ireland

Economy

The Irish economy is the fastest growing in the Eurozone. The Irish Government is committed to sustainable management of public finances and Ireland receives an ‘A’ grade from all major credit rating agencies.

  • Ireland is a stable, competitive, secure and pro-business country;
  • Ireland is a committed member of the EU single market and the eurozone;
  • Ireland has a highly skilled, educated, young and multicultural population

 

After avoiding a decline in output in 2020 thanks to buoyant exports of Ireland-based multinationals, real GDP is projected to grow by 4.2% in 2021, despite stringent sanitary measures introduced early in the year. As recent Covid-19 pandemic restrictions are gradually eased, domestic demand will strengthen, even though uncertainty will continue to weigh on firms’ investment decisions. Pent-up consumer spending, as households unwind pandemic-induced excess saving, is projected to lift growth to 5.1% in 2022.

The latest figures from the Central Statistics Office (CSO) shows that the Irish economy outperformed all expectations in 2020, with GDP growing on the back of the ongoing robust performance of the multinational sector and a smaller contraction in domestic demand due to aggressive government support.

Foreign Direct Investment

Foreign Direct Investment (FDI) has been identified as one of the key drivers of Ireland’s return to economic prosperity. The Irish Government has continued to demonstrate its commitment to the FDI sector by establishing a business environment that is conducive to FDI activity and Ireland remains a location of choice for many of the world’s leading companies. Indeed, over 1,100 companies, including many of the world’s leading brands, have decided to place Ireland at the hub of their European operations. Ireland is regarded as the number one destination for attracting high-value FDI according to yearly IBM Global Locations Trends Reports. The report tracks destination countries by average job value of investment projects.

Factors that contribute to this include:

  • a competitive economic and business environment that includes a low corporation tax regime and a well-educated and young workforce;
  • improving productivity levels (the IMD World Competitiveness Yearbook 2014 places Ireland 3rd for GDP per capita ahead of Singapore, 18th, France, 6th, and the UK, 21st);
  • membership of the European Union with consequent ease of access to EU markets;
  • its strategic location, with easy access and excellent transport links.

 

In addition, Ireland’s education system enjoys a reputation to rival the world’s best, being ranked 5th in the world for meeting the needs of a competitive economy and 5th for the percentage of 25-34 year olds with tertiary education (IMD World Competitiveness Yearbook 2014).

Like most jurisdictions, Ireland experienced significant economic challenges during the financial crisis. However, this has also had a positive influence in helping Ireland regain much of the competitive advantages that had been eroded during the economic boom of the late 1990s and the first half of the 2000s. Ireland has increased its ranking in the IMD World Competitiveness Yearbook. The 2016 edition of the Yearbook places Ireland 7th out of 61 nations (up from 16th place in 2015) for overall competitiveness, and 1st for the following; real GDP growth, flexibility and adaptability of the workforce, availability of finance skilled workers and for investment incentives (attractive to foreign investors).

Ireland is currently listed as 24th in the World Economic Forum Global Competitiveness Report. According to the World Bank’s Doing Business Report 2016, Ireland scores highly internationally for ease of doing business, with its ranking 13th in the OECD-32. In Forbes’ annual ranking of the Best Countries for Business 2015, Ireland grabs an impressive 4th place.

IDA Ireland

The key State agency with responsibility for driving Ireland’s FDI strategy is IDA Ireland. With more than 40 years’ experience in fostering and encouraging Ireland’s FDI activity, its track record in attracting and developing this sector in Ireland is significant.

The global environment in which Ireland competes for FDI is constantly changing. Ireland’s historic success in winning a far higher share of FDI than warranted by the size of our population and economy reflects the ability of Government, stakeholders and citizens to adapt and capitalise on the opportunities that arose as business models shifted and new growth areas emerged. The forthcoming period will once again be characterised by change and evolution in the global FDI environment, but at an accelerated pace and set against an exceptionally challenging economic backdrop as a result of the Covid-19 pandemic. IDA’s Driving Recovery and Sustainable Growth strategy is intended to position the IDA to respond to this changed environment

As part of the new FDI strategy, IDA Ireland plans to partner with clients for future growth through 170 RD&I and 130 training investments, to embrace the opportunities of a green recovery with 60 sustainability investments and to target a 20% increase in client expenditure in Ireland to maximise FDI impact.

The impact of multinational companies (MNCs) nationally and regionally goes far beyond their direct and indirect employment contribution. Irish economy expenditure by IDA Ireland clients in 2019 totalled €25.2bn, an increase of 14.8% on the previous year. Payroll spend was up 11.3% to €15.1bn, Irish materials spend rose by 2.3% to €2.7bn and Irish services spend was up 29% to €7.4bn. Capital expenditure increased in 2019 by 10% to €7.4bn, the bulk of it concentrated in the Life Sciences and Technology sectors.

Today, Ireland hosts most of the significant players across a range of sectors including:

  • information and communications technologies;
  • life sciences;
  • medical technology;
  • international financial services;
  • entertainment and media.
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