Investors should once again consider Ireland as an ideal place for entrepreneurial activity. From 1995 to 2007 Ireland exhibited the highest growth rates in Europe at 6%. One of the keys to making Ireland the Celtic Tiger in investment and growth was the exceptional low corporate tax rate of 12.5%. During those years the country transformed itself into a modern knowledge economy. The focus was on high-tech industries and services. The national economy of Ireland became dependent on industry, trade and most importantly investment from abroad. The Economist Magazine determined in 2005 that Ireland also known as the Emerald Isle had the best quality of life in the world.
The country is known for having a mild temperate climate and because of abundant rainfall, a lush greenness. Travelers often remark on the beauty of the countryside and the rich cultural history of Ireland.
Then came the financial panic of 2008. The 24 years of continuous growth from 1984 to 2007 came to an end. The economic disruption was made worse by the collapse in the Irish real estate market. The property bubble that had existed during the years of rapid growth simply imploded. By 2008 Ireland had the highest rate of household debt in relation to disposable income in the developed world at 190%. This resulted in a further slowdown in private consumption and a long lasting recession. Then came the news in 2010 that economic conditions had become so dismal in Ireland that for the first time in a generation, emigration had returned. The Irish Banking Crisis also added to the challenges facing the country from 2008 to 2011. This was largely the result of the over speculation in the property market.
There was no real growth in 2010 but did expand at an annual rate of 2.2% in 2011. This was mostly due to improvements in the export sector. Private consumption however did not revive. The economy only grew 0.2% in 2012. The European Sovereign Debt Crisis beginning in 2012 and continuing into 2013 caused Ireland to fall almost back towards recession once again.
Now in 2014 Ireland has finally turned the corner after a slow preceding year. The first quarter of 2013 saw a GDP (Gross Domestic Product) loss of -3.5%. The second quarter of the year saw an increase of 0.7%. This was followed by a 1.8% gain in the third quarter. The last quarter of 2013 saw a loss of 0.1% but the first quarter of 2014 saw growth surge forward by 2.7%. Mostly driven by exports the increase was the highest in five quarters. It is half the rate achieved in the first quarter of 2007 when growth registered 5.50% but it is expected to be more sustainable now.
Ireland remains a business friendly and modern economy. It is ranked 15th in the world for the Ease Of Doing Business Rank as measured by the World Bank. As a result of having companies like Google, Intel, Microsoft, Pfizer and other high technology manufacturers in the country, Ireland produces high value products. The nation has become one of the world’s biggest exporters of pharmaceuticals and software.
Located in north-western Europe the Republic of Ireland has a population of just 4.6 million people. Northern Ireland as part of the United Kingdom has a population of 1.8 million. A war of independence at the beginning of the 20th century led to the partition of the island. The northern part of Ireland saw civil unrest from the 1960’s until the 1990’s. A political agreement brought this period of violence to an end. The Republic of Ireland joined the European Economic Community in 1973.
Ireland comprises 84,421 km2 which is a total of 32,595 square miles. It has a coastline of 2,797 km the equivalent of 1,738 miles.
The GDP in 2013 was calculated to be 162.3 billion Euros equal to $212.87 billion USD (United States Dollar). The Nominal GDP per capita was estimated to be 35,336 Euros ($43,750 USD). The PPP (Purchasing Power Parity) in GDP was $190.4 billion USD in 2013. The PPP per capita was $41,300 USD. The GDP by sector equaled 70.4% for services, 28% for industry and 1.6% for agriculture in 2013.
Average house prices have fallen 47% since their peak in 2007.
As of 2013 the labor force was 2.182 million. The labor force by occupation is 78% involved in services, 19% in industry and 5% in agriculture.
The main export partners of Ireland consist of the United States, United Kingdom and Belgium at 21%, 14% and 13% respectively of the total amount. Germany follows at 8%, Switzerland at 5.7%, and France at 4.5%. The Netherlands and Spain round it out at 4.2% and 3%.
Major exports consist of animal products, chemicals, computers, food products, machinery and equipment, medical devices and pharmaceuticals. Total value of all exports in 2013 was estimated to be 86.89 billion Euros the equivalent of $113.6 billion USD.
The total value of imports in 2013 was estimated to be 49.63 billion Euros which equals $65.09 billion USD. As is indicated Ireland runs a sizable trade surplus.
Major import partners consist of the United Kingdom at 32% of the total trade followed by the United States at 11% and Germany at 8%. China, the Netherlands and France follow at 6%, 4.5% and 4% respectively. Norway and Japan have 2% each of the remaining trade.
Foreign Reserves for Ireland as of July 2014 are estimated at 1.219 billion Euros equal to $1.6 billion USD. The country has been able to reduce the annual budget deficit from 32.4% of GDP in 2010 to 7.2% in 2013. The 2010 figure was the largest deficit in the world in comparison to the size of the GDP.
In the 2014 Index of Economic Freedom rated by the Heritage Foundation Ireland receives a score of 76.2%. Worldwide it ranks 9th behind Mauritius but ahead of Denmark. Regionally Ireland ranks 2nd in Europe just behind Switzerland. Ireland’s score has increased by 0.5% from last year due to improvements in trade freedom, labor freedom, and the management of public finance. The increases in these categories were able to offset the small declines in monetary freedom and the problem of corruption.
Over the past 20 years Ireland has been able to increase its economic freedom score by 8 points. Despite recent difficulties the country has been able to remain competitive. A 2010 National Recovery Plan was implemented which led to the nationalization of some banks. A $90 billion USD European Union and International Monetary Fund bailout was arranged to help Ireland maintain fiscal stability. The idea was to get Ireland back on a solid footing by 2015, which has already occurred. Loans have been restructured and the debt burden eased as of 2013.
The top individual tax rate in Ireland is 41%. There is a value added tax known as the VAT and a capital gains tax. The total tax burden is 27.6% of gross domestic income. Government spending is down to 48.1% of the domestic economy. The big problem has been public debt which is still exceeding 117% of GDP. Ireland has enacted austerity measures, which not only has led to reduced public debt, but restored the country’s credit rating somewhat. Standard and Poor an American rating company gives Ireland A- on both domestic and foreign credit. The T&C Assessment is AAA and the outlook is positive. Moody’s still ranks the country lower with a country credit score of BBB plus but still a positive outlook. Fitch gives the same prospect but scores the country higher at A-.
An efficient legal system exists in Ireland. It protects the acquisition and disposition of all property rights. Contracts are secure with expropriations extremely rare.
As a member of the European Union Ireland has a low 1.1% average tariff rate. There are very few barriers to investment and international trade in general. Firms both domestic and foreign can expect to receive equal treatment under an efficient and competitive investment system. The only major change in recent times has been the restructuring of the banking sector.
To invest in Ireland, there is no minimum capital requirement. Completing any required licensing is not difficult. Incorporating a business takes only 4 procedures and takes slightly longer than a week.
The labor market is fairly flexible with moderate labor costs. Monetary has been maintained and fiscal stability have been restored. Prices are set by market forces with the major exception of energy industries. This industry is somewhat subsidized by the government.
Ireland is the world’s most profitable country for United States corporations.
Ireland still has a great deal to offer the foreign investor. It is a gateway to the European market with a business amiable environment. There are numerous advantages in locating a project or venture here.