the irish economy june 2013. irelandgreeceeu population4,588,252 (2011)9,903,268 (2011)503,679,730...
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The Irish Economy
JUNE 2013
Ireland Greece EU Population 4,588,252 (2011) 9,903,268 (2011) 503,679,730
Area 84,420 km2 131,990 km2
Gross GDP figure €144 billion €227 billion €15,650 billion
GDP per capita €35,455 €20,400 €27,475
GDP Growth
2011+1.4% -7.9% (Calendar year 2011)
2012+0.9% -6.9% -0.5%
2013 (f)+1.5% D/Finance Forecast -4.3% M/Finance +0.4% (Commission)
Unemployment: 14% (March 2013) 27.2% (February 2013) 10.9%
Youth unemployment: (15-24) 30.3% (March 2013) 57.6% (February 2013) 23.5%
General government deficit/GDP
2011-13.4% -9.4%
2012-8.2% -6.9%
2013 (f)-7.5% -4.6 %
2014 (f)-5.1% - 3.5%
Primary Surplus Target 2014 2014
Debt/GDP 118% 170%
Fiscal Consolidation 21% of GDP (since 2008 to end 2015)
Over 40% of GDP (since 2010 to end 2015)
Total Exports (2011) €92.9 billion €22.45 billion €1.5 trillion
Bilateral Merchandise Exports(to end-year 2012)
€257 M (€304 M 2011)
€24 M (€39 M 2011)
Balance of Payments €3.2 billion -€2.2 billion €28.3 billion
Inflation (HICP) 1.68% (Dec. 2012) 0.33% (Dec. 2012)
Programme Funding
2010-- €29 billion (1st programme)
2011€31.5 billion €44 billion (2nd programme)
2012€21.3 billion €128 billion
2013€13.7 billion €17.6 billion
2014-- €18.2 billion
€85 billion total by end 2013, including €17.5bn Irish funds plus €67.5 billion EFSF/IMF funds
€110 billion in 1st package, plus €130 billion in 2nd, to be disbursed by end 2015
Bank recapitalisation €64 billion €50 billion
Origins of the Irish Crisis
2002-
2006
•Sustainable export-led growth of the Celtic Tiger period gave way to expansion reliant on a property bubble
2007-
2008
•Ireland had been running a budget surplus and low debt levels but domestic bubble burst at the same time as the global financial crisis
2010
•Powerful and sudden impact on our domestic banking system, on employment, and on government deficits and debt, necessitated EU-IMF programme of assistance.
2011-
•Now on road back to sustainable growth and balanced finances with a smaller, well-capitalised banking system
Ireland Greece EUGDP Growth
2011 +1.4% -7.9% (Calendar year 2011)
2012 +0.9% -6.9% -0.5%
2013 (f)+1.5% D/Finance Forecast
-4.3% M/Finance
+0.4% (Commission)
Unemployment: 14% (March 2013)
27.2% (February 2013)
10.9%
Youth unemployment: (15-24)
30.3% (March 2013)
57.6% (February 2013)
23.5%
EU/IMF Programme
€40.2bn
€22.5bn
4.8
€17.5bn
EU IMF Bilateral (UK, Swe, Den) Ireland• €85bn [€67.5bn in multilateral and
bilateral loans, €17.5bn from Ireland’s own resources]
• 190 individual targets under programme fully achieved
• Intend to exit the programme and make full return to markets in 2013
Stabilising the Public FinancesWe are on course to meet our 3% deficit target by 2015
Deficit forecast to be reduced
below 3% in 2015
We have implemented measures to yield a
budgetary adjustment of €29bn (or about 18% of GDP) since mid-2008
Budget 2013 delivered another
€3.5bn of that consolidation Deficit of
7.6% in 2012
Government Deficit Being Brought Down Steadily and On Target
2007 2008 2009 2010 2011 2012 2013 2014 2015-13
-11
-9
-7
-5
-3
-1
1 0.1
-7.4
-11.5-10.7
-9.1
-7.6 -7.4
-4.3
-2.2
Government Primary Balance
% of GDP
*Excludes costs of bank recapitalisations
Department of Finance
Department of Financeforecasts
The economy has returned to growth
Department of Finance
1989199019911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013201420152016
-11
-6
-1
4
9
14
GD
P G
row
th %
Y-o
-Y
Celtic Tiger Period Domestic Driven Growth Downturn & Recovery
Department of Financeforecasts
2013 to 2016
General Government Debt Will Peak This Year and then Decrease
Department of Finance
2007 2008 2009 2010 2011 2012 2013 2014 2015 20160
20
40
60
80
100
120
140
% of GDP
Department of Financeforecasts
• Up over 5% in 2011 and 5.5% in 2012
at current prices
• Agri-food Exports Up 28% in last 3 years
Exports Now Above
Pre-Crisis Levels
• Multinational Sector Critical incl. Pharma,
MedTech, ICT, Financial Services
• Balance of Payments in Surplus for third year in a row after 10 years
in deficit
Department of Finance
Exports Have Supported Growth
€m
Consolidation is being implemented in the least growth damaging way possible, with the majority of
the adjustment on the spending side
Budget 2013 includes just under €2 billion in spending cuts and over €1.4 billion in tax increases.
Tax measures include- introduction of a property tax- increases in capital gains and capital acquisitions tax- increase in excise duty on alcohol and cigarettes- increase on motor and vehicle taxes
Expenditure cuts in 2013 include- reduction of €10 a month in the rate of child benefit-the reduction of the duration of job seekers benefit- further reform of public service conditions
12.5% Rate of Corporation Tax will remain as a key element supporting inward investment and export-led growth
Restoring the Banks to Health
Recapitalised on Time and Below Expected Costs
€64bn, ca. 41% of 2011 GDP
Consolidated, Deleveraged, Reduced in Size
Pillar Bank Strategy in place with 2 main banks, AIB and BoI to focus on domestic economy. Over €40bn in deleveraging
achieved
Action at European LevelAs other EU Member States face similar
challenges, Europe is working on new ways to break the link between sovereigns and banks
Continuing Challenges
Jobs added in 2012 but unemployment unacceptably high
Household Debt Elevated
Impact of expiring patents in
pharmaceutical sector on export growth
International Economic Conditions
Our Strengths
Flexible, Adaptable Economy•1st in the world for the flexibility and
adaptability of our people •2nd most globalised country in the world
Pro-Business Environment
•1st in the world for investment incentives•In top 10 easiest countries in the world to start a
business
High Levels of Education•In Top 10 most educated countries in world •1st in the world for availability of skilled labour
Favourable Demographics
Youngest population in Europe
Sources: World Bank, OECD, IMD Competitiveness Yearbook 2012, Eurostat, E&Y, Economist Intelligence Unit
1st in the Eurozone for ease of
doing business
2nd highest trade
surplus in Europe
2012 saw highest net job creation in
Ireland from Foreign Direct
Investment in a decade
1st in the world for highest average value
from investment
In global top 20 for quality of scientific
research