Dáil Éireann Debate, Thursday - 23 November 2023
206. Deputy Bernard J. Durkan asked the Minister for Enterprise, Trade and Employment the extent to which he continues to monitor challenges to the manufacturing of the service sectors here, with particular reference to ensuring continued maximum levels of employment and high production and marketing standards; and if he will make a statement on the matter. [51750/23]
View answerMy Department continues to monitor challenges to the manufacturing and services sectors of the economy. With an unemployment rate of 4.8% in September, the Irish economy has been operating at a level close to full employment for quite some time. The risks to employment will depend on the risks to the economy, more broadly. Added to this, Irish GDP grew by 13.6% in 2021, and 9.4% in 2022, therefore, a moderation in economic growth might naturally be expected. A moderation in growth is also forecast in the Economic and Fiscal Outlook published as part of Budget 2024 which projects Real GDP growth of 4.5% for both 2024 and 2025.
As set out in Budget 2024, risks to the near-term economic outlook are tilted to the downside. The rise in interest rates, which the ECB does not expect to cut before Summer 2024, would be expected to dampen international economic growth rates. Given the open nature of the Irish economy, a slowdown in international growth may lead to more moderate rates of growth domestically. Cyclicality in demand can also have implications for sectoral economic growth - such as demand for pharmaceutical products which had seen significant growth during the COVID-19 pandemic and bolstered Irish exports during that period. As an open economy we are also aware of the risk which any rise in protectionism internationally presents.
Cost inflation can have significant impacts on the ability of the manufacturing and services sectors to compete internationally. However, Ireland has shown its strong ability to compete internationally, evident in our ranking of 2nd in the IMD World Competitiveness Rankings this year from a total of 64 countries. This ability to compete is also evident in the continued resilience of the Irish economy at a challenging time for the global economy.
Manufacturing in Ireland is one of the critical sectors of the Irish economy with clusters of world class manufacturing operations in sectors such as biopharmaceuticals, engineering, medical technology, building materials, and food production. There were 317,200 people employed in the industry sector and although there was a decline in Q2 2023 compared to the same period of time last year, overall, there were more people employed in the industry sector than prior to Covid-19.
The most recent economic data from the CSO shows that the Industry (excluding Construction) sector increased by 0.8% year-on-year over the same period. Gross Value Added for the Multi National Enterprise-dominated sectors expanded by 1.7% in Q2 2023 compared with Q2 2022.
Recent CSO data on Industrial Production and Turnover production in manufacturing industries rose by 1.3% in September compared to August 2023. However, production was 22.8% lower in the three months from July to September 2023 when compared with the same period in 2022. From July 2023 to September 2023, turnover in manufacturing industries grew by 0.7% compared with the previous three-month period.
Over the two-year period prior to Budget 2024 a total of €12 billion – 4½ per cent of national income – was provided in cost of living and doing business supports, comprising a mix of permanent and one-off measures, to absorb some of the impact and ease the burden of inflation on households and businesses. Budget 2024 contained a number of measures which will support businesses facing increased costs of doing business, including the Increased Cost of Business Grant will be targeted at Small and Medium sized businesses who operate from a rateable premises, with a total allocation of €250m and an extension of the 9% VAT reduction for gas and electricity until 31st October 2024, among other measures.
As set out, my Department continues to monitor sectoral economic activity and risks to this activity. However, no new measures are currently under consideration beyond what has already been announced. The Government’s approach to enterprise policy continues to be guided by the priorities set out in the White Paper on Enterprise 2022-2030 – published in December last year. This review of Enterprise Policy was the first since 2018 and was motivated by an awareness of a changing enterprise landscape posing new challenges, including shifting patterns of globalisation driven by geopolitical change, disruptive technological innovation, and lagging productivity in parts of the indigenous sector of the economy.
The White Paper is being implemented through a series of consecutive two-year Implementation Plans, the first of which was published in May of this year, covering the period 2023-2024. As part of this implementation process, the White Paper commits to exploring options for strengthening horizon scanning and strategic foresight in the future, which will facilitate an agile policy approach that enables Government to adapt to new risks and opportunities as they emerge.
