Economy of Ireland

Economy of Ireland

Dublin City Centre
Rank 44th (2011 est.)
Currency 1 Euro = 100 cent(s)
Fiscal year Calendar year
Trade organisations OECD
GDP €159 bn (2011, current prices)[2]
GDP growth 1.4% (2011)[1]
GDP per capita $42,920 (2011 est.)
GDP by sector agriculture (2%) (2010 est.)
CPI) 2.5% (2011 est.)
below poverty line
6.2% (consistent poverty in 2010)[3]
Gini coefficient 33.9 (2010)
Labour force 2.126 million (2011 est.)
Labour force
by occupation
agriculture (5%) (2011 est.)
Unemployment 15.1 % (September 2012)[4]
Average gross salary 2,764 € / 3,731 $, monthly (2006)[5]
Average net salary 2,025 € / 2,733 $, monthly (2006)[5]
Main industries medical devices.
Ease of Doing Business Rank 15th[6]
Exports $124.3 billion (2011 est.)
Export goods animal products.
Main export partners Switzerland 4% (2010)
Imports $71.35 billion (2011 est.)
Import goods clothing.
Main import partners Netherlands 4.9% (2010)
Gross external debt $2.352 trillion (30 September 2011)
Public finances
Public debt €169.2 billion (108.2% of GDP in 2011)[2]
Budget deficit €20.5 billion (-13.1% of GDP in 2011)[2]
Revenues €55.8 billion (35.7% of GDP in 2011)[2]
Expenses €76.2 billion (48.7% of GDP in 2011)[2]
Economic aid Donor of ODA: $585 mn (2010)[7]
Recipient of agricultural aid: $895 mn (2010)[8]
Credit rating Standard & Poor’s:[9]
BBB+ (Domestic)
BBB+ (Foreign)
AAA (T&C Assessment)
Outlook: Negative[10]
Outlook: Negative
Outlook: Stable
Foreign reserves $2.188 billion (February 2012)[11]
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars

The economy of the Republic of Ireland is a modern knowledge economy, focusing on services and high-tech industries and dependent on trade, industry and investment. In terms of GDP per capita, Ireland is ranked as one of the wealthiest countries in the OECD and the EU-27 at 5th in the OECD-28 rankings as of 2008.[12] In terms of GNP per capita, a better measure of national income, Ireland ranks below the OECD average, despite significant growth in recent years, at 10th in the OECD-28 rankings. GDP (national output) is significantly greater than GNP (national income) due to the repatriation of profits and royalty payments by multinational firms based in Ireland.[13]

A 2005 study by The Economist found Ireland to have the best corporation tax, currently at 12.5% standard rate.

The [18]

After a year with side stepping economic activity in 2010, Irish real GDP rose by 1.4% in 2011. The economic challenges continued, however, with some economists fearing the [21]


[edit] History

[edit] Since the Irish Free State

From the 1920s Ireland had high trade barriers such as high tariffs, particularly during the [22]

In the 1970s, the population increased by 15% and national income increased at an annual rate of about 4%. Employment increased by around 1% per year, but the state sector amounted to a large part of that. Public sector employment was a third of the total workforce by 1980. Budget deficits and public debt increased, leading to the crisis in the 1980s.[23] unemployment had risen to 20%, annual overseas emigration reached over 1% of population, and public deficits reached 15% of GDP.

In 1987 [24]

Between 1985 and 2002, private sector jobs increased 59%. The economy shifted from an agriculture to a agriculture as the country’s leading sector.

[edit] Celtic Tiger (1995-2007)

The economy benefited from a rise in consumer spending, construction, and business investment. Since 1987, a key part of economic policy has been Social Partnership, which is a neo-corporatist set of voluntary ‘pay pacts’ between the Government, employers and trade unions. The 1995 to 2000 period of high economic growth was called the “Celtic Tiger”, a reference to the “tiger economies” of East Asia.[15]

GDP growth continued to be relatively robust, with a rate of about 6% in 2001, over 4% in 2004, and 4.7% in 2005. With high growth came high inflation. Prices in [27] and inflation actually dropped slightly from the previous month.

In terms of [14]

The positive reports and economic statistics masked several underlying imbalances. The construction sector, which was inherently cyclical in nature, accounted for a significant component of Ireland’s GDP. A recent downturn in residential property market sentiment has highlighted the over-exposure of the Irish economy to construction, which now presents a threat to economic growth.[31]

Ireland is currently ranked as the world’s third most “economically free” economy in an index created by free-market economists from the Index of Economic Freedom.

[edit] Financial Crisis (2008-)

It was the first country in the EU, to officially enter a recession related to the Financial crisis 2008, as declared by the [36]

The [41]

[edit] Bank solvency

A housing construction site in Sandyford, 2006.

The second problem, unacknowledged by management of Irish banks, the financial regulator and the Irish government,[44]

Irish property developers [46]

Irish banks correctly identify a systematic risk of triggering an even more severe financial crisis in Ireland if they were to call in the loans as they fall due. The loans are subject to terms and conditions, referred to as “covenants”. These covenants are being waived[50] This does not appear to be consistent with the real negative changes taking place in property market fundamentals.

In contrast, on the 7th of October 2008, [43]

[edit] Guarantee of banking system

On 30 September 2008, the Irish Government declared a guarantee that intends to safeguard the Irish banking system. The Irish National guarantee, backed by taxpayer funds, covers “all deposits (retail, commercial, institutional and interbank), covered bonds, senior debt and dated subordinated debt“.[54]

Despite the Government guarantees to the banks, their shareholder value continued to decline and on 2009-01-15, the Government[57] to artificially prop up the property developers have been revealed.

[edit] National Recovery Plan 2011-2014

In November 2010 the Irish Government published the National Recovery plan, which aims to restore order to the public finances and to bring its deficit in line with the EU target of 3% of economic output by 2015.[60]

[edit] Sectors

[edit] Exports

Graphical depiction of Ireland’s product exports in 28 color coded categories.

Exports play an important role in Ireland’s economic growth. A series of significant discoveries of base metal deposits have been made, including the giant ore deposit at Tara Mine. Zinc-lead ores are also currently mined from two other underground operations in Lisheen and Galmoy. Ireland now ranks as the seventh largest producer of zinc concentrates in the world, and the twelfth largest producer of lead concentrates. The combined output from these mines make Ireland the largest zinc producer in Europe and the second largest producer of lead.[61]

Ireland is the world’s most profitable country for US corporations, according to the [64]

New sources are expected to come on stream after 2010, including the [66] While the Irish economy has significant debt problems in 2011, exporting remains a success.

[edit] Primary sector

The primary sector constitutes about 5% of Irish [68]

In the late nineteenth century, the island was mostly deforested. In 2005, after years of national afforestation programmes, about 9% of Ireland has become forested.[72]

Beyond this, the country has significant deposits of [73]

The construction sector, which is inherently cyclical in nature, now accounts for a significant component of Ireland’s GDP. A recent downturn in residential property market sentiment has highlighted the over-exposure of the Irish economy to construction, which now presents a threat to economic growth.[30]

While there are over 60 credit institutions incorporated in Ireland,[78]

[edit] Government

[edit] Welfare benefits

As of December 2007, Ireland’s net unemployment benefits for long-term unemployed people across four family types (single people, [82]

[edit] Wealth distribution

The percentage of the population at risk of relative poverty was 21% in 2004 – one of the highest rates in the European Union.[83] Ireland’s inequality of income distribution score on the Gini coefficient scale was 30.4 in 2000, slightly below the OECD average of 31.[84] Sustained increases in the value of residential property during the 1990s and up to late 2006 was a key factor in the increase in personal wealth in Ireland, with Ireland ranking second only to Japan in personal wealth in 2006.[85] However, residential property values and equities have fallen substantially since the beginning of 2007 and major declines in personal wealth are expected.[86]

[edit] Taxation

Total tax revenue as a percentage of GDP for Ireland over the past several decades compared to other first world nations.

Over the past several decades, tax revenues have fluctuated at around 30% of GDP (see graph).

[edit] Currency

Before the introduction of the euro notes and coins in January 2002, Ireland used the Irish pound or punt. In January 1999 Ireland was one of eleven European Union member states which launched the European Single Currency, the euro. Euro banknotes are issued in €5, €10, €20, €50, €100, €200 and €500 denominations and share the common design used across Europe, however like other countries in the eurozone, Ireland has its own unique design on one face of euro coins.[87] The government decided on a single national design for all Irish coin denominations, which show a Celtic harp, a traditional symbol of Ireland, decorated with the year of issue and the word Éire.

[edit] See also

[edit] References

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[edit] External links

Source: Wikipedia