Dáil Éireann Debate, Tuesday - 15 June 2021
397. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he expects Ireland’s economic forecast to be affected by international development; and if he will make a statement on the matter. [32079/21]
View answer402. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which the economic fundamentals remain stable and in accordance with best practice internationally; and if he will make a statement on the matter. [32084/21]
View answer411. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he remains satisfied regarding the future prospects for Ireland’s economy with particular reference to the need for competitiveness in national and international markets; his plans for corrective measures in this regard; and if he will make a statement on the matter. [32093/21]
View answerI propose to take Questions Nos. 397, 402 and 411 together.
Approaching the pandemic, Irish economic fundamentals were healthy. Strong economic growth had been recorded for a number of years, the labour market was close to full employment, and surpluses had been recorded on the current account and the government budget balance.
The outbreak of the Covid-19 crisis turned the economy on its head and resulted in a sharp contraction of domestic economic activity last year and into the first quarter this year. My Department projected modified domestic demand growth of 2½ per cent for this year and 7½ per cent for 2022 in the April Stability Programme Update. It is anticipated that as the reopening progresses, the release of pent-up demand financed by the unwinding of historically high household savings will support the recovery.
While the domestic sector suffered a hit last year, the multinational sector has proven resilient, demonstrating the competitiveness of Irish exports in international markets. The outlook for Irish exports in light of strengthening global demand is very positive and Ireland’s modified current account, which strips out the effects of globalisation, is projected to remain in surplus in the medium term. This reflects Ireland’s continuing competitiveness on the international stage, for both indigenous and multinational exports. Looking to the future, our talented and flexible workforce, our track record as a successful place to do business, and our pro-enterprise environment mean that our economy’s long-term fundamentals remain strong.
As the global economy has experienced the shock of the Covid-19 crisis in a reasonably symmetric way, Ireland’s economic fundamentals remain healthy and relatively strong in an international context. Unavoidable consequences of the pandemic and the associated necessary policy supports put in place, such as the increases in unemployment and public debt, have been shared international experiences. These imbalances are expected to moderate as the economic recovery takes hold.
The strength and resilience of the Irish economy lies in its openness to international trade and investment. Nonetheless as a small open economy, Ireland is more exposed to external risks, including the international path of the virus, the extent of permanent damage to the global economy, and potential changes to the international tax environment. External risks continue to be monitored closely by my Department.
