I propose to take Questions Nos. 213, 214 and 228 together.
Ireland’s economic recovery from the Covid-19 crisis is now underway. Strong growth in the domestic economy was recorded in the second quarter of this year and domestic economic activity surpassed its pre-pandemic level for the first time since the start of the crisis.
The global economy experienced the shock of the Covid-19 pandemic in a reasonably symmetric way and a strong but uneven recovery is now anticipated. As in Ireland, the improving health situation and continued easing of public health restrictions in the European Union has put EU economies back in motion. In July, the European Commission projected growth of 4.8 per cent for the EU in 2021. This is broadly in line with expectations for the domestic economic recovery.
The expected rebound in the EU and globally creates a supportive external environment for Ireland’s exports in the coming years. The multinational sector in Ireland proved resilient throughout the crisis and is expected to continue performing strongly into the future. The outlook for Irish indigenous exports is also brighter in light of strengthening global demand, although Brexit is expected to have a strong impact on indigenous exports from next year. The Irish modified current account, which strips out the effects of globalisation, is expected to remain in surplus in the medium term.
Ireland provides an attractive location for FDI, with our talented and flexible workforce, our hard-won reputation as a pro-enterprise jurisdiction, and our successful record as home for global business. Evidence such as the IDA’s FDI results for 2020 suggests that foreign companies continue to value our FDI strengths.
Despite the positive outlook, risks to the international recovery continue to exist. As a small open economy, Ireland is particularly exposed to these external risks and my Department continues to monitor them closely.