The Irish economy grew by 1.4% in the 3rd quarter of 2015 and annual growth is now running at 7%. Ireland is the fastest growing economy in the world this year.
Looking at the Irish economy, it is clear that the recovery is more broad based than just the GDP numbers above. Tax receipts have increased significantly and are well ahead of analysts’ expectations. The unemployment rate has fallen from 15.1% in 2012 to 8.9% this year.
As usual it is the export sector of the economy that leads the way and this trend continues multi-nationals’ exports growing strongly. Consumer spending is also helping to lift the economy with the increased numbers at work driving up domestic demand. The construction sector which suffered most during the economic downturn is now showing encouraging signs of recovery. Indeed, almost all parts of the economy are exceeding expectations.
There is no doubt that our recent growth can be attributed to our close trade ties with the USA and the UK and from the growth in both of those economies. The appreciation of the US Dollar and Sterling against the Euro, together with the wage cuts that were imposed at the beginning of the down turn have both combined to make our exports more competitive. Ireland continues to be the destination of choice for US foreign direct investment.
The hectic pace of growth since the financial crisis has many commentators wondering if this level of growth is sustainable and if the recovery will continue. Current growth rates worry those who believe they look similar to the ‘Celtic Tiger’ boom years and fear there might be another financial crisis. With property prices rising and rents in Dublin back to 2007 levels, they might have a point.
However, unlike the Celtic Tiger years, financial regulation has been significantly beefed up and it is likely now regulators will intervene and not let things get out of hand like before. The Central Bank is keeping a much closer eye on what is happening and the crazy lending practices of previous years are gone.