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Finance | Irish economy’s international standing

To ask the Minister for Finance the extent to which Ireland can continue to be seen internationally as a stable and reliable economy; and if he will make a statement on the matter.

To ask the Minister for Finance the extent to which Ireland’s economy compares with other European economies in the context of combatting inflation and maintaining growth; and if he will make a statement on the matter.

REPLY

Ireland is currently facing many of the same economic headwinds as the wider European economy. The invasion of Ukraine and Russia’s weaponisation of gas supplies has triggered an exceptionally large energy price shock and undermined global economic prospects. Europe has been particularly exposed to the economic consequences of the war, owing to its significant dependence on Russian energy imports, in addition to other direct trade links.

Consumer price (HICP) inflation picked up sharply over the last year and was recorded at 9.6 per cent in October. The rise in inflationary pressures is not only a feature of the Irish economy but is one that has become evident across most advanced economies, with euro area inflation of 10.7 per cent recorded in October.

Despite the darkening economic outlook, Ireland is in a strong position to weather the storm. Domestic economic activity expanded significantly in the first half of the year, with modified domestic demand (MDD) – a proxy for the domestic economy – up by 11.7 per cent. The number of people in employment is now at a record level of well over 2½ million, and the unemployment rate stood at just 4.4 per cent in October – close to the lowest on record.

Ireland continues to be seen as a stable and reliable economy on the world stage. Foreign direct investment (FDI) in the Irish economy remains robust, with the stock of FDI in Ireland reaching over €1,280 billion in the second quarter of 2022. Last year, the IDA reported the highest increase in FDI employment in a single year, reflecting strong international confidence in the Irish economy.

Taking account of all factors, the outlook for the international economy is one of extreme uncertainty and there are significant risks to the economic outlook for Ireland, as well as for the European economy. Nevertheless, Ireland remains on a relatively strong economic footing and, along with our partners in Europe, we will withstand the economic headwinds together.

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