Ireland - Overview
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Irland left the bailout plan in December 2013 and has again become a financially independent country. The country meticulously followed the advice of the troika (IMF, ECB, EU), implementing a policy of austerity including a rise in taxation, reduction of state sector wages and introducing budget cuts. International investors have regained confidence in the country, as evidenced by the successful emission of ten-year state obligation and the stabilisation of the banking sectors.
The increase in competitiveness has been attractive to foreign companies. State debt should nevertheless reach a record level of 126% of the GDP in 2014. The budget deficit, which has been decreasing, is now at 7.3% of the GDP but the goal is to reduce it under 3% by 2015. The government will continue its policy of fiscal consolidation and its structural reforms. Household debt is high and there have been many cases of mortgage foreclosures.
The unemployment rate is at its three-year minimum yet remains still very high, close to 13% of the workforce.
Ireland’s recent industrial development has been achieved by an intentional policy promoting high-tech companies to export and, in part, by offering attractive packages to investors. This sector contributes to nearly one third of the GDP. Textiles, chemical and electronic products have, in particular, obtained high results.
The service sector (approximately two-thirds of the GDP), banking and finance have experienced such a large growth that Dublin counts now with a sizable international financial center and tourism has become a substantial source for foreign exchange revenues (5% the GDP).
Foreign trade overview
Following the international economic crisis the structural trade surplus has increased sharply, especially due to the fall in imports. In 2013, the trade surplus decreased under the effect of the reduction in exports, a trend which should continue in 2014 with the expected recovery in imports.
The main imports are machinery and equipment, oil and petroleum products, textiles and clothing. The main exports are computers, chemical and pharmaceutical products, live animals and animal products. Ireland's main trade partners are the European Union and the United States.
The structure of FDI has undergone through a transformation, the low value-added activities have been reduced to the profit of R & D and upscale services (engineering, information and communications technologies, pharmaceutical products, medical technology). The country's assets include its attractive fiscal and legal frame, a high-skilled and multi-cultural work force and a strong relationship with the United States. In addition, the crisis has brought the costs of both labor and real estate down, which further increases its attractiveness to investors.