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The Celtic Tiger is roaring again. After an economic downturn in 2008, Ireland was in dire straits. It was more often associated with the failing economies in Southern European countries than its peers in Northern Europe. In 2015, however, these troubles seem to be a relic of the distant past. Ireland’s GDP has grown at an astounding 7% through this point in 2015, while most of Western Europe is marred in low growth in the 0 to 2 percent growth range. This positive trend in the Irish economy has been spurred mainly by investment from overseas, particularly U.S. pharmaceutical and tech companies. A skilled workforce, and a minimal corporate tax rate of 12.5% has led many of these U.S. corporations to set up their base European operations in Ireland. Companies such as Pfizer, Apple, Facebook, and Google have built up major operations in Ireland’s main cities. Some major US companies have even completed mergers or acquisitions to execute a tax inversion, and move their base of operations for tax purposes to Ireland. Not only are these countries creating jobs and bringing in tax income to help the public financing of Ireland, but they are helping to offset all of the negative aspects that were dragging down the Irish economy.#
Net trade, or imports minus exports, has been a boon for the Irish economy, and it is has been a particularly important function as it helped offset the rest of the fledgling economy. In 2014, overall exports from Ireland were worth 114% of its total GDP, an astounding number (imports at 95% of GDP were also quite high). These numbers stem from the fact that Ireland’s two main exporting partners, the U.S. and U.K., have economies that have far outperformed the broader euro area economy. Having such close ties to economies that are experiencing relatively solid growth has driven Ireland’s net trade to positive territory and has offset other issues within the Irish economy. The strength in the trade sector has also been buoyed by a weak euro, making Irish goods cheaper to import for countries like the U.S. and the U.K.
All in all, Ireland’s recovery since the great recession has been nothing short of remarkable. Things are not perfect, however, with unemployment hovering around 9%, and GNP (a measure of production by Irish citizens and firms) lags behind GDP, due to the fact that GDP is inflated by foreign company’s earnings within Ireland. Overall though, Ireland is on a fast track, and will look to continue its rise in 2016. Only time will tell if the Celtic Tiger is going to remain one of the world’s most dynamic economies.
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