The Irish economy experienced the fastest GDP growth in the developed world last year. As per the latest Euro-stat reports, there has been significant growth in the second quarter, with Ireland achieving three times the EU average.
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Like a lot of other EU countries, Ireland has had to go under pandemic restrictions since the start of 2020. All major business sectors including construction, retail and hospitality sectors saw a drop at the beginning of the restrictions. The impact of the lockdown restrictions forced a lot of businesses to avail of the Employee wage subsidy scheme. However, construction, retail and hospitality sectors were allowed to reopen over the second quarter. The economy of Ireland has grown by 6.3%, compared to the average growth rate of 2.1% in the EU overall.
Ireland’s GDP has also experienced a massive 21.1% surge in comparison with the same period in 2020. Last year, the Central bank of Ireland (CBI) released a €940 million capital buffer in March, which was expected to facilitate between €10 billion and €16 billion in lending aimed at helping businesses.
It is believed that Ireland was the only country to register a positive GDP growth in the EU last year accounting for 3.4%. The latest Exchequer returns from the Department of Finance showed a surprise €800 million surge in corporation tax receipts last month. This has placed the Government in a stronger position ahead of the upcoming budget. The month of August is historically a quiet month for corporation tax, but this year the results were different. As per the Department of Finance, the business tax generated in August was €1.04 billion. This figure is 323%, or €797 million, more than was expected.
Finance Minister Paschal Donohoe supported the second quarter results saying, “the domestic demand, as well as net exports, led to the broad-based growth altogether.”
Two main contributors to the higher growth rate:
- High consumer spending
- Increased construction activity.
Ireland is leading the way in terms of foreign direct investment (FDI). Ireland is the number one choice for US Tech companies in 2021. Ireland is growing as an economy, this is represented in both its GDP and FDI figures. You can refer to the IDA Ireland 2021 report "facts about Ireland" to explore the numbers that are driving the Irish economy.
The Economic and Social Research Institute (ESRI) predicted last June that the Irish economy would grow by 11pc in 2021. According to Kieran McQuinn, a research professor with the ESRI, “Last year the (Irish) economy was a complete outlier to every other economy in Europe and in the western world…. What happened this year is that the exports have kind of held up but now, as the economy is opening up, the domestic sectors are coming on stream.”
Ireland is set for an “exceptional rise” in economic activity this year on the back of its multinational sector.