As a small open economy, Ireland has always been exposed to factors beyond our control, impacting on our ability to prosper, and the global economic landscape is becoming more, not less, challenging to Ireland’s growth prospects.
In January 2019, the IMF revised down their projections for global economic growth over the next two years, with growth projected to be 3.5% in 2019 and 3.6% in 2020. The growth forecast had already been revised downwards (partly because of the negative effects of tariff increases enacted by the United State and China). The further downward revision in part reflects carry over from softer momentum in the second half of 2018 – including in Germany following the introduction of new automobile fuel emission standards and in Italy where concerns about sovereign and financial risks have weighed on domestic demand.
The IMF also note that the risks to global growth tilt to the downside. An escalation of trade tensions beyond those already incorporated in the forecast remains a key source of risk to the outlook. A range of triggers beyond escalating trade tensions – including a no deal Brexit, and a greater-than-envisaged slowdown in China - could spark a further deterioration in risk sentiment with adverse growth implications, especially given the high levels of public and private debt.
Increasing productivity is the only long-term sustainable way of increasing the standard of living for our people, and there are a range of initiatives in train across Government to enhance our competitiveness performance, including:
The review of SME policy designed to assess the SME business ecosystem and the range of supports offered to SMEs undertaken by my Department in conjunction with the OECD;
The development of an Industry 4.0 strategy to respond to the challenges and opportunities arising from the impact of digital technologies; and
The Future Growth Loan Scheme that will allow businesses to borrow for up to 10 years to support capital investment and enhance their competitiveness.
My Department and the Department of the Taoiseach are also preparing the Future Jobs Programme, a cross-government initiative with a strong focus on improving productivity, that will be published in February. This initiative will propose concrete and ambitious actions to enhance our productivity and competitiveness and will ensure that we are well positioned to adapt to transformational changes the economy will face in the years ahead.