Economy of Ireland

By | April 29, 2022

According to cheeroutdoor, Ireland is one of the small economically developed industrial and agricultural countries, largely dependent on foreign trade. In the 1990s The Irish government implemented a series of national economic programs aimed at curbing inflation, reducing public spending, improving the skills of the workforce and attracting foreign investment, resulting in high (on average 8%) economic growth in 1995-2000. In 2001-02, the country’s economy was hit by the global recession, which affected mainly high-tech export industries, as a result of which growth rates were almost halved.

GDP in 2001 at current prices amounted to 114,479 million euros (at constant prices in 1995 – 88,170 million euros); GNP – 96,802 million and 75,089 million euros, respectively; gross national income – 97,712 million and 75,961 million euros. Compared to the previous year (2000), GDP grew by 5.75%, and GNP – by 1.25%. There has been a significant gap between the growth rates of GDP and GNP, due to the fact that the impact of the rapid growth of individual sectors of the economy on national income turned out to be limited, since these sectors belong mainly to foreign capital and are not labor intensive. In addition, there was a marked decrease in the income of Irish companies received abroad. GDP per capita in 2001 reached 29,820 euros, GNP per capita – 25,216 euros, gross national income per capita – 25,453 euros; these figures per worker – 69,499, 58,768 and 59,320 euros. The share of industry in GDP (2002) – 36%, agriculture – 4%, services – 60%. The structure of GDP is characterized by trends typical of most developed countries: the shares of industry and agriculture are declining, and the share of services is growing. The economically active population in 2002 was estimated at 1.9 million people; of these, 1.8 million people worked, were unemployed approx. 90 thousand people, incl. unemployed for a long time – 22 thousand people. The unemployment rate was 4.6% (including long-term unemployment – 1.2%) and practically did not change compared to 2001. There were slightly more unemployed men than women (4.8% and 4.3%). The highest unemployment rate was observed in the age group from 15 to 24 years. The service sector employs 65% of the workforce, industry 28%, and agriculture 7%.

In 1993-2000, inflation remained relatively low, averaging 2.4% per year. However, in 2001-02 the situation worsened somewhat both compared to previous years and with the situation in other countries – its main trading partners, while in the eurozone countries inflation slowed down from 2.4 to 2.2%, in Ireland it in 2002 increased from 4 to 4.7%. The prices for services grew especially fast. At the same time, wage growth slowed down in almost all sectors, with the exception of construction.

Industry began to develop mainly from the beginning. 1960s Ireland has traditional food, textile, garment, glass, engineering, chemical and energy industries, but the most rapidly developing high-tech and knowledge-intensive industries such as pharmaceuticals, electronics and the information and communication technology sector, the formation of which was due to a consistent policy of attracting foreign investment. Currently, more than 1,000 foreign companies operate in the country, accounting for approx. 90 thousand jobs and approx. 70% of exports of industrial products. Electronics, chemistry and pharmaceuticals, automotive, metalworking, and telecommunications equipment production are largely under foreign control. In 2002, the volume of industrial production increased by 7.9%. The growth of the manufacturing industry amounted to 8.5% and was almost completely determined by the increase in the output of the chemical, primarily pharmaceutical, industry by 24%. Excluding this sector, industrial production actually fell by 3.8%. The decline in production in the information technology sector reached 5.1%, the volume of food production increased by 3.7%, and all other industries showed a reduction in production by an average of 7.6%. In the coming years, the growth of industrial production will largely depend on the situation on world markets and on the implementation of several new large-scale projects with the participation of foreign capital and will be provided at the expense of the high-tech sector.

The energy sector is based on the consumption of natural gas, coal, peat and oil and is represented mainly by thermal power plants, which produce 95% of electricity. Ireland has the world’s largest peat-fired power plants (more than 15% of electricity). Hydroelectric power plants account for only 4% of total electricity generation. There are no nuclear power plants in the country. Ireland is a net importer of electricity.

The high technology sector includes a wide range of industries. For example, the electronics industry consists of the following industries: components, computers, semiconductors, software development and production, telecommunications and information communications, services. Pharmaceuticals play an important role in the chemical industry.

Agriculture is an important sector of the Irish economy, accounting for 4% of GDP and approx. 7% employed. For agriculture, including forestry, 5 million hectares are used (out of a total area of approximately 7 million hectares). The dominant industry is meat and dairy farming, which accounts for more than 80% of the gross agricultural product, while poultry farming is much less developed. Cattle and dairy farming is predominantly concentrated in the south and east of the country, while pig farming is common in the western counties. In 2001, the country produced 2576.9 thousand tons of beef, 82.9 thousand tons of lamb and 226.4 thousand tons of pork; milk production reached 611 thousand tons, butter – 138 thousand tons, cheese – 123 thousand tons.

Plant growing is developing in the southern, central and eastern regions of the country. Cereals (barley, wheat and oats), potatoes, and sugar beets are grown. The country surplus provides its own needs for barley and oats, but is forced to import wheat (91% self-sufficiency).

Agriculture in Ireland as a whole is subsidized: in 1990-2001, state subsidies increased from 408.9 million to 710.8 million euros. In 2001, 72% of subsidies (€512.6 million) went to livestock, 15.2% (€108.4 million) to cereals.

The coastal waters are heavily fished. 1421 fishing vessels caught 294 thousand tons of fish for a total value of 206.2 million euros (2001). Main commercial species: cod, haddock, herring, mackerel. Aquaculture is also rapidly developing: salmon, trout, mussels, lobsters are bred on an industrial scale.

The main part of external cargo transportation falls on the merchant fleet, consisting of 26 large-capacity vessels with a total displacement of 127 thousand tons. The length of internal shipping routes is small – approx. 700 km. The main ports are Dublin, Cork, Galway, Limerick. Domestic transportation, both freight and passenger, is carried out mainly by road and to a lesser extent by rail. The total length of railways is 3,300 km, of which 1,400 are narrow-gauge railways, used mainly for the delivery of peat to thermal power plants. Only 38 km are electrified. In 2001, 2.6 million tons of cargo was transported by rail. The length of motor roads is 92.5 thousand km. On average, approx. 160 thousand cars and 30 thousand new trucks per year. There are regular intercity bus routes. 41 airport, the largest in Dublin, Cork and Shannon. The length of gas pipelines is 7.6 thousand km (1.2 thousand km – main and 6.4 thousand km – distribution).

The Irish telecommunications system is one of the most modern and developed in Europe. There are 1.6 million telephone subscribers (about 80 numbers per 100 households), there are 3 million mobile phones, 2.55 million radios, and 1.82 million televisions. There are 115 radio stations and 4 television stations in the country. In 2002 there were 1.31 million Internet users in Ireland.

Tourism is one of the fastest growing service industries. Now the country is visited by approx. 6 million people per year, 75% of them for tourism purposes. More than 50% of tourists come from the UK, 20% from continental Europe and 15% from North America. Eco-tourism is very popular.

Ireland is a member of the eurozone, and its contribution to the total money supply is 134 billion euros, or 2.5%. After the entry of Ireland into the European monetary system, the main task of its Central Bank was to carry out the unified monetary policy developed by the ECB. The bank regularly operates on the open market, lends to the country’s largest financial institutions, monitors compliance with minimum reserve requirements, operates Ireland’s real-time electronic payment system, through which domestic and international payments of approx. 20 billion euros, acts as an agent and “banker” of the government, controls the activities of the country’s financial institutions, including banks and building societies. The interest rate of the Central Bank on both loans and deposits is the same as the rate set by the Governing Council of the ECB for the entire euro area. Mortgage rates fluctuate around 4.5%, the bank’s prime rate is in the range of 3-4%. Ireland operates the Dublin-based Irish Stock Exchange, which spun off from the London Stock Exchange in 1995. The movement of the rates of securities circulating on it generally corresponds to the trends of the world stock market.

Ireland’s public finances are in good shape. Since 1997, the country’s budget has had a positive balance, which in 2002 was 95 million euros, or 0.1% of GDP. However, in recent years, the positive balance tends to decrease and already in 2003, it is likely to be replaced by a negative one. Public debt in 1990 reached 94% of GDP, but has been continuously declining and in 2002 amounted to approx. 37% of GDP.

The standard of living of the Irish is constantly growing: if in 1987 it was approximately 65% of the average level for the EU, then in 2000 it had already reached it. In 2002, the population’s expenditures on the consumption of goods and services amounted to a total of 58,864 million euros (in 1995 – 29,315 million euros) and continue to grow by 2.5-3% per year. Wages are also growing, although the rate of growth has slowed down significantly. In 1998, the average wage of industrial workers was 387.6 euros per week, and in 2001 – 470.96 euros, skilled construction workers – 539.68 and 681.08 euros, bank employees – 541.52 and 650.16 euros, workers insurance spheres – 553.28 and 681.2 euros. Household savings rate – approx. 5%. The richest 10% of households accounted for 27% of income, while the poorest 10% accounted for 2%. The number of people below the poverty line is approx. 7%.

Ireland trades with almost every country in the world. Commodity exports 92,655.2 million euros (2001), dominated by machinery and equipment, computers, chemicals, pharmaceuticals, livestock, livestock products. The main partners are the EU countries and the USA. 63% of exports went to the EU (Great Britain – 19.8%, Germany – 11.3%, France – 7.7%, the Netherlands – 5.6%, Belgium – 4.8%), to the USA – 17.1%. Merchandise imports (€57,353.5 million in 2001) consist of engineering products (especially information processing equipment), chemicals, oil and oil products, textiles and clothing. 61.4% of imports came from the EU countries (33.4% – from the UK, 5.9% – from Germany, 4.5% – from France, 3.5% – from the Netherlands), from the USA – 16.2%, from Japan – 4%. The trade balance reached EUR 35,301.6 million, or 35.5% of GNP. During 1990 – 2001, the country’s exports increased 5 times, imports – 3.6 times. In trade in services, the country is a net importer: in 2001, its balance sheet deficit was 17,380 million euros. The current account balance was also negative (-345 million euros, or 0.25% of GNP).

Ireland actively attracts foreign capital and invests abroad itself. Between 1998 and 2001, cumulative foreign direct investment in Ireland increased from €53,315 million to €156,889 million, and Irish investment abroad increased from €17,342 million to €38,293 million. Foreign portfolio investment in Ireland €495,688 million (end 2001), foreign portfolio investment in Ireland €414,217 million. In general, the country is a net importer of capital and its net international investment position is characterized by a deficit of 12,103 million euros.

Economy of Ireland