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Ireland Country Risk Analysis
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Economic Risk
Ireland Country Risk Analysis
Financial Situation
• Ireland is a member of the European Union and one of the original 11 countries to adopt the euro as its currency in 1999
• In an effort to streamline and rebalance the budget and improve the fiscal position, the government is well on its way to fulfilling its pledge of reducing government workers by 12% and overall compensation by 15% by 2015. Changes to benefits and pension plans are also being negotiated.
- Inflation rate: decrease due do high unemployment rate
- Banking sector: Recovering from the porverty bubble in 2008
Political Risk
Financial Risk
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- Public debt ratio: Still high
• The government expects to further reduce the debt-to-GDP ratio between 2013-2015 by 5%, which is in line with the targets set by the EU Economic and Financial Affairs Council (EcoFin).
• The World Bank ranks Ireland #15 out of 189 countries in terms of ease of doing business.
Ireland is a small, modern, trade-dependent economy.
- GDP growth averaged 6% in 1995-2007
- In 2010, the budget deficit reached 32.4% of GDP - the world's largest deficit, as a percentage of GDP.
- In late 2010, Ireland got $92 from EU and IMF international rescue plan.
- In 2014, the economy rapidly picked up and GDP grew by 3.6%. The recovering economy assisted lowering the deficit to 4.2% of GDP.
STRENGTHS
- Flexible labour and goods markets
- Business-friendly climate, advantageous tax system
- Presence of multinational companies
- Specialisation in high value-added sectors (including pharmaceuticals, IT services)
WEAKNESSES
- Dependence on the European economic cycle
- Excessive private (particularly household) debt
- High public debt, increased by the cost of the banking crisis
- Banking sector still convalescing