Dáil Éireann Debate, Thursday - 23 November 2023
189. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which confidence in the Irish economy remains strong in the international sphere; and if he will make a statement on the matter. [51763/23]
View answer190. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he is confident that Ireland continues to compete on the international stage, with particular reference to any potential threats; and if he will make a statement on the matter. [51764/23]
View answerI propose to take Questions Nos. 189 and 190 together.
I am confident that Ireland continues to compete on the international stage. At the end of the first half of this year, the stock of foreign direct investment stood at €1.1 trillion, while 300,000 were employed in the multinational sector here at the end of 2022. Ireland’s talented and flexible workforce, strong legal and regulatory landscape, and reputation as a stable economy all contribute to our competitiveness in encouraging both indigenous and foreign investment. Continued investment in skills and infrastructure will help Ireland to remain competitive on the international stage.
Indeed, Ireland’s economy is expected to remain resilient going forward. In its latest forecast published last week, the European Commission projected modified domestic demand growth – my preferred measure of domestic economy activity - of 2.3 and 1.9 per cent in 2023 and 2024 supporting continued employment growth across the economy. This compares favourably to more subdued growth among other Member States. In the Euro Area as whole, economic growth of 0.6 and 1.2 per cent is expected this year and next.
However, the Commission is forecasting negative growth in net exports, driving negative GDP growth of 0.9 per cent for this year. This is reflective of factors including a fall-off in demand for covid-related pharma-chem exports and a decline in demand among key trading partners demonstrating the sensitivity of our economy to global shifts. Indeed, the global economy is facing into another year of considerable uncertainty, posing potential threats to our economy. That said, the Commission expects a return to growth of around 3 per cent next year.
Further sector-specific shocks in multinational-dominated sectors such as the post-Covid adjustment in the pharma sector this year would potentially impact output and incomes. Risks associated with geopolitical tensions remain with wars in Ukraine, and more recently the Middle East, threatening to put upward pressure on global commodity prices. Geopolitical fragmentation also poses the risk of fracturing global value chains and weakening global trade. Continued persistence of underlying price pressures could erode real incomes further, while potentially prompting further interest rate increases.
Despite these challenges, however, Ireland’s economy is well placed to remain competitive. A record 2.6 million people are in employment while supports that this government have put in place will continue to protect those still impacted by the cost of living crisis. This government will remain steadfastly committed to investing in our workforce and infrastructure to ensure continued prosperity.
