Ireland has been dealing with a mortgage crisis for some time. To find ways out of this situation, it has turned to the International Monetary Fund (IMF) for guidance and possible financial assistance. In a rather unusual move for the IMF, rather than suggesting that Ireland needs to tighten its lending policies, as has been the case in most countries with similar problems, the IMF has proposed liberalization.
Apparently, when Irish eyes are smiling, it is time to call an election. That is what Prime Minister Kenny has done. The election will be held on February 26. The polls suggest that the governing coalition (Fine Gael and Labour) it may struggle to secure a majority.
In some ways, Kenny is making the same bet as Spain’s Rajoy. The economy’s strength will provide a lift on Election Day. It has not worked out so well for Rajoy though Kenny may have greater success. However, this is most likely to be in a coalition.
Ireland has among the lowest taxes in Europe. However, the Organization for Economic Cooperation and Development (OECD) is not impressed. They warned Ireland that it will have to spend more time selling itself in the new era of global tax transparency if it wants to experience meaningful economic growth.
The European business environment might remain fragile, but recent figures illustrate how the Republic of Ireland continues to punch above its weight when it comes to attracting investment from overseas. US multinational firms have been the chief contributors to this success and since 2008 after the global financial crisis, corporate America’s investment has been five times larger than their investment in China and 16 times greater than that in India. It is worth noting too that US investment remains below pre-crisis levels in other EU countries such as Germany, Spain and France.
According to finance minister Michael Noonan, Ireland’s economy may grow over 4.0 percent for 2015. The Irish economy expanded 4.8 percent in 2014, which was the nation’s best performance in eight years.
According to a recent report issued by the Central Statistics Office (CSO) and reported by DW.de, Ireland has logged the fastest rate of growth of all of the 28 European Union member countries. The growth appears to reflect strong surges in both exports and domestic demand.
What the Numbers Reveal
The Irish economy grew by 4.8 percent in 2014, due to higher exports and stronger demand domestically. The European Commission also predicts that Ireland will grow at a faster rate than any EU country in 2015.
Recent data published in regards to the Irish economy has suggested that a significant recovery may be in the cards for the country this year. Several vital factors throughout Ireland have had a positive impact on the growth forecast. Unexpected levels of high performance in underlying tax revenues, steady increases in employment levels, and reliable trends surfacing in the retail sector have all pushed numbers up.
Ireland is to phase out its controversial “double Irish” tax scheme. It follows international criticism and the European Union’s investigation into the legalities of Apple and Ireland’s tax arrangement, and a long-term fascination with whether the country is akin to a tax haven for multinational companies. But endless focus on Ireland’s corporate tax rates makes it seem that this is the sole reason for the high levels of foreign investment.
The ratings agency known as ‘Fitch’ has recently upgraded its view on Irish debt to an A- grade. This announcement said that the country has recently begun to experience less vulnerability within their banking sector, and improved trends within the economy. The agency delivered its assessment recently in a pre-budget boost, suggesting that the outlook for the rating was considered to be stable. This means that they currently do not expect to see any significantly stormy economic clouds on Ireland’s horizon.
