How did the Irish economy perform in 2022?
Which countries are Ireland’s economic partners?
Does the entire population in Ireland benefit from economic growth?
The Irish economy is growing as the UK economy was weakening before and after Brexit. In the early twentieth century, the economy of every European country ranked above Ireland. But in early 2023, Ireland is the fastest-growing economy in the eurozone. The whole population does not benefit from this economic growth, and a gap exists in Irish society.
Strong Economic Growth
The Republic of Ireland was the fastest-growing economy in Europe last year. According to the Central Statistics Office (CSO), the Irish economy grew by 12.2% regarding the gross domestic product (GDP). Multinational export in different sectors and the strong growth in the manufacturing sector have had a positive impact. The headline figure was twice the next-best country and four times the EU average.
Low Inflation Rate
As energy prices decrease, Irish inflation drops to 8.2%, under the eurozone area inflation rate of 9.2%. Irish inflation rate in January was 7.7%, marking the third month of decreases in a row. In January, eurozone inflation decreased to 8.5% after European energy costs sharply dropped. The Irish economy performed more robustly than expected in 2022, and Irish inflation will fall even further in early 2023.
Euro Zone Economy Depends on Irish Growth
The Irish economy grew more than expected last year, and there is a positive view of the Irish economy soon. Accordingly, the economic recession would not be as severe as predicted. The primary monetary aggregates show rapid growth in the Irish economy. The eurozone economic growth at the end of 2022 is also because of Ireland’s expansion.
Ireland, US Economic Partnership
Despite the rising energy bills and the cost-of-living crisis, Ireland’s investment activity was vigorous in 2022. Ireland accounts for only 1% of the EU population, but it has an 8% EU share of the US R&D spending. Over 500 Irish companies operate in the US in different sectors, from agri-food manufacturing to construction. Besides, over 650 Us businesses employ 150,000 employees in Ireland; that is 7% of the total workforce.
A Shift from the UK to the World
Ireland is an open economy, and the US aims to create opportunities for more economic ties. When Ireland joined the EU in 1973, Ireland’s trade hugely depended on the UK as its leading partner. Gradually, the US has overtaken the UK in terms of being the top trading partner. Today, Ireland benefits from diverse economic partnerships in the EU and outside the bloc.
Arab Countries Import Irish Goods, Services
Ireland’s trade goes beyond the EU and US as the country explores more opportunities elsewhere. Arab-Irish Chamber of Commerce has reported that Arab countries’ imports from Ireland are on course for a new record. Ireland is a high-quality production environment for northern African and Middle East countries. Irish goods and services are exported to many Arab countries where the growing population increases demands.
Irish Inflation Keeps Reducing
Ireland is in a good economic position, better than the rest of Europe. Despite Irish inflation hitting a 38-year high in 2022, at the end of the year, it dropped by 1 percent. Irish inflation is now 7.7% and is expected to be lower this year because of a decrease in wholesale prices. Irish inflation dropped month by month, and the country will avoid a recession in 2023.
Global Recession Affects the Irish Economy
Irish economy performed more potent than the rest of the eurozone in 2022 and will continue the same trend in 2023. However, Irish GDP growth will slow in 2023 and 2024 as some of its main trade partners will face recession risks. Any recession among the partners would reduce the pace of Irish economic growth. Britain is still one of the important trade partners, on the verge of a recession ahead.
UK Faces Recession
The UK economy is shrinking and facing a recession, while many leading economies are growing this year. Its inflation rate will still be two-digit while the eurozone inflation drops to a lower level. Economy of Britain was not immune to the financial pressures and could shrink by 0.5% in 2023. Weak economic performance will definitely puts pressure on the UK’s economic ties.
London Loses Its Economic Place
The UK annual inflation rate in October 2022 was 11.1, a four-decade worst record. Compared to the world’s big economies, the UK is performing the worst due to Brexit and bad governance. The country is more isolated, struggling with staffing shortages and low investment. London was one of the world’s largest and most important financial hubs. But today, the UK faces a long-term drop in GDP and foreign direct investment.
Brexit Makes Goods Transfer More Difficult
Since the Brexit deal came into effect in 2021, trade between the UK and Ireland has fallen to a lower level. Before January 2021, there needed to be more controls on goods transportation between the UK and Ireland. The UK is no longer a member of the EU single market, so there are various border controls. Brexit created a situation that EU companies prefer to send their cargo to Ireland directly, and they bypass Britain.
Negative Brexit Impacts
Brexit chaos has been long and unpleasant, adding to the cost-of-living crisis in Britain. The deal has affected the economic ties between the two neighbours. Ireland has virtually felt the impacts of Brexit on its foreign trade. Brexit has negatively impacted Irish production and, eventually, its GDP. Yet, Irish domestic policies could mitigate Brexit effects.
Irish People Reduce Expenditure
Ireland could keep its economy above the other European countries. The global economy faces a slowdown, but the Irish economy will not go into recession this year. But Ireland is also struggling with the cost-of-living crisis, and people have already reduced their spending habits. Around 30% of the people struggle to manage their living costs, while 25% feel comfortable.
A Third of Irish Needs Support
The proportion of Irish people who struggle to make ends meet is 6% lower than the global average. Irish people were the globally quickest who reacted to the cost-of-living crisis and reduced their expenditures. Currently, a third of the population needs financial support, and there is a societal gap. The Irish government should provide future support for those most in need.
Irish Government Must Act
The Irish government could provide a reasonable budget position among the eurozone countries. Tax revenues grew in 2022, and Ireland will run a budget surplus in 2023. Now, the Irish economy is powerful enough to fund Irish businesses, the market, and Irish households. The Irish government should level up the living standards of the entire society in line with the growing economy.
