ECONOMY
Ireland boasts a vibrant, globalized economy, with GDP per capita second only to Luxembourg's in the EU. The "Celtic Tiger" period of the mid to late 1990s saw several years of double-digit GDP growth, driven by a progressive industrial policy that boosted large-scale foreign direct investment and exports. GDP growth dipped during the immediate post-September 11, 2001 global economic slowdown, but has averaged roughly 5% yearly since 2004, the best performance for this period among the original EU 15 member states. Between 2004 and 2007, the Irish economy generated roughly 90,000 new jobs annually, attracting over 200,000 foreign workers, mostly from the new EU member states, in an unprecedented immigration influx. The construction sector has accounted for approximately one-quarter of these jobs. However, the Irish economy began to experience a slowdown in 2008, with the government forecasting 0.5% GDP growth in 2008. Some economists believe that the economy will fall into recession this year. The cause of the downturn has been a marked slowdown in Ireland's housing market. The government plans to cut spending over the next two years by just over $2 billion as a result of a fall in tax receipts, again, largely as a result of less construction-related activity.
Economic and trade ties are an important facet of overall U.S.-Irish relations. In 2007, U.S. exports to Ireland were valued at $9 billion, while Irish exports to the U.S. totaled $30.4 billion, according to the Bureau of Economic Analysis. The range of U.S. exports includes electrical components and equipment, computers and peripherals, drugs and pharmaceuticals, and livestock feed. Irish exports to the United States represent approximately 20% of all Irish exports, and have roughly the same value as Irish exports to the U.K. (inclusive of Northern Ireland). Exports to the United States include alcoholic beverages, chemicals and related products, electronic data processing equipment, electrical machinery, textiles and clothing, and glassware. According to Ireland's Central Statistical Office, Irish exports to the United States from January to September 2006 rose by 7% compared to the same period in 2005, while Irish imports from the United States from January to September 2006 fell by 14% compared to the same period in 2005.
U.S. investment has been particularly important to the growth and modernization of Irish industry over the past 25 years, providing new technology, export capabilities, and employment opportunities. As of year-end 2007, the stock of U.S. foreign direct investment in Ireland stood at $85 billion, more than the U.S. total for China, India, Russia, and Brazil--the so-called BRIC countries--combined. Currently, there are approximately 620 U.S. subsidiaries in Ireland, employing roughly 100,000 people and spanning activities from manufacturing of high-tech electronics, computer products, medical supplies, and pharmaceuticals to retailing, banking, finance, and other services. In more recent years, Ireland has also become an important research and development (R&D) center for U.S. firms in Europe.
Many U.S. businesses find Ireland an attractive location to manufacture for the EU market, since it is inside the EU customs area and uses the euro. In 2005, U.S. firms accounted for 61% of Ireland's total exports. Other reasons for Ireland's attractiveness include: a 12.5% corporate tax rate for domestic and foreign firms; the quality and flexibility of the English-speaking work force; cooperative labor relations; political stability; pro-business government policies; a transparent judicial system; strong intellectual property protection; and the pulling power of existing companies operating successfully (a "clustering" effect). Factors that negatively affect Ireland's ability to attract investment include: increasing labor and energy costs (especially when compared to low-cost countries in Eastern Europe and Asia), skilled labor shortages, inadequate infrastructure (such as in the transportation and Internet/broadband sectors), and price levels that are ranked among the highest in Europe.
Nominal GDP (2007): $186.2 billion.
Real GDP growth (2007): 5.3%.
Nominal GDP per capita (2007): $43,100.
Natural resources: Zinc, lead, natural gas, barite, copper, gypsum, limestone, dolomite, peat.
Agriculture (5% of GDP): Products--cattle, meat, and dairy products; potatoes; barley; hay; silage; wheat.
Industry (46% of GDP): Types--food processing, beverages, engineering, computer equipment, textiles and clothing, chemicals, pharmaceuticals, construction.
Trade (2007): Exports--$115.6 billion (excluding services): machinery, transport equipment, chemicals, food, live animals, manufactured materials, beverages. Imports--$84.2 billion (excluding services): grains, petroleum products, machinery, transport equipment, chemicals, textile yarns. Major suppliers--Great Britain and Northern Ireland 31%, U.S. 11%, Germany 8%, China 7%, Japan 4%, France 3%, rest of the world (including other EU member states) 36%.
