The Irish Economy
JUNE 2013
Ireland
Greece
EU
Population
4,588,252 (2011)
9,903,268 (2011)
503,679,730
Area
84,420 km2
131,990 km2
Gross GDP figure
€144 billion
€227 billion
€15,650 billion
GDP per capita
€35,455
€20,400
€27,475
+1.4%
-7.9%
(Calendar year 2011)
+0.9%
-6.9%
-0.5%
+1.5% D/Finance Forecast
-4.3% M/Finance
+0.4% (Commission)
Unemployment:
14% (March 2013)
27.2% (February 2013)
10.9%
Youth unemployment: (15-24)
30.3% (March 2013)
57.6% (February 2013)
23.5%
-13.4%
-9.4%
-8.2%
-6.9%
-7.5%
-4.6 %
-5.1%
- 3.5%
2014
2014
GDP Growth
2011
2012
2013 (f)
General government deficit/GDP
2011
2012
2013 (f)
2014 (f)
Primary Surplus Target
Origins of the Irish Crisis
• Sustainable export-led growth of the Celtic Tiger period gave
way to expansion reliant on a property bubble
2002-2006
• Ireland had been running a budget surplus and low debt
levels but domestic bubble burst at the same time as the
2007-2008
global financial crisis
2010
• Powerful and sudden impact on our domestic banking
system, on employment, and on government deficits and
debt, necessitated EU-IMF programme of assistance.
2011-
• Now on road back to sustainable growth and balanced
finances with a smaller, well-capitalised banking system
Ireland
Greece
EU
+1.4%
-7.9%
2012 +0.9%
-6.9%
(Calendar year
2011)
-0.5%
-4.3%
M/Finance
+0.4%
(Commission)
GDP Growth
2011
+1.5%
2013 (f) D/Finance
Forecast
Unemployment: 14% (March
2013)
Youth
30.3% (March
unemployment: 2013)
(15-24)
27.2% (February 10.9%
2013)
57.6% (February 23.5%
2013)
EU/IMF Programme
• €85bn [€67.5bn in multilateral and
EU
IMF
Bilateral (UK, Swe, Den)
€17.5bn
4.8
€40.2bn
Ireland
bilateral loans, €17.5bn from Ireland’s
own resources]
•
€22.5bn
•
190 individual targets
under programme fully
achieved
Intend to exit the
programme and make full
return to markets in 2013
Stabilising the Public Finances
We are on course to meet our 3% deficit target by 2015
We have implemented
measures to yield a
budgetary adjustment
of €29bn (or about 18%
of GDP) since mid-2008
Budget 2013
delivered another
€3.5bn of that
consolidation
Deficit of
7.6% in 2012
Deficit forecast
to be reduced
below 3% in
2015
Government Deficit Being Brought Down
Steadily and On Target
Government Primary Balance
1
0.1
-1
-2.2
-3
-4.3
%-5
of
GDP
-7
-7.4
-7.6
-9
-9.1
-11
-7.4
Department of Finance
forecasts
-10.7
-11.5
*Excludes costs of bank
recapitalisations
-13
2007 2008 2009 2010 2011 2012 2013 2014 2015
Department of Finance
The economy has
returned to growth
14
Celtic Tiger Period
Domestic Driven Growth
Downturn & Recovery
GDP Growth % Y-o-Y
9
4
-1
-6
Department of Finance
forecasts
2013 to 2016
-11
Department of Finance
General Government Debt Will
Peak This Year and then Decrease
140
120
100
% of GDP
80
60
40
20
0
2007
2008
2009
2010
2011
2012
2013
2014
2015
Department of Finance
forecasts
Department of Finance
2016
Exports Have Supported Growth
Exports
Now Above
Pre-Crisis Levels
€m
•Up over 5% in 2011 and
5.5% in 2012
at current prices
•Agri-food Exports Up
28% in last 3 years
Department of Finance
•Multinational Sector
Critical incl. Pharma,
MedTech, ICT, Financial
Services
•Balance of Payments
in Surplus for third year
in a row after 10 years
in deficit
Consolidation is being implemented in the least
growth damaging way possible, with the majority of
the adjustment on the spending side
Budget 2013 includes just under €2 billion in spending cuts
and over €1.4 billion in tax increases.
Expenditure cuts in 2013 include
- reduction of €10 a month in the rate of
child benefit
-the reduction of the duration of job
seekers benefit
- further reform of public service conditions
Tax measures include
- introduction of a property tax
- increases in capital gains and capital
acquisitions tax
- increase in excise duty on alcohol and
cigarettes
- increase on motor and vehicle taxes
12.5% Rate of Corporation Tax will remain as a key element
supporting inward investment and export-led growth
Restoring the Banks to Health
Recapitalised on Time
and Below Expected Costs
€64bn, ca. 41% of 2011 GDP
Consolidated, Deleveraged, Reduced
in Size
Pillar Bank Strategy in place with 2 main banks, AIB and BoI to
focus on domestic economy. Over €40bn in deleveraging
achieved
Action at European Level
As other EU Member States face similar
challenges, Europe is working on new ways to
break the link between sovereigns and banks
Continuing Challenges
Jobs added in 2012
but unemployment
unacceptably high
Household Debt
Elevated
Impact of expiring
patents in
pharmaceutical sector
on export growth
International
Economic Conditions
Our Strengths
Flexible,
Adaptable
Economy
Pro-Business
Environment
• 1st in the world for
the flexibility and
adaptability of our
people
• 2nd most globalised
country in the
world
• 1st
in the world for
investment
incentives
• In top 10 easiest
countries in the
world to start a
business
High Levels of
Education
• In Top 10 most
educated countries
in world
• 1st in the world for
availability of skilled
labour
Favourable
Demographics
Youngest
population in
Europe
Sources: World Bank, OECD, IMD Competitiveness Yearbook
2012, Eurostat, E&Y, Economist Intelligence Unit
2nd highest
trade
surplus in
Europe
1st in the world for
highest average value
from investment
In global top 20 for
quality of scientific
research
1st in the
Eurozone
for ease of
doing
business
2012 saw highest
net job creation in
Ireland from
Foreign Direct
Investment in a
decade