Goodbody Stockbrokers have today warned that it would be easy to become complacent about Ireland’s current economic situation due to growth booming, public finances balanced and unemployment hitting decade lows.
This comes after the National Competitiveness Council (NCC) issued stern warnings of underlying vulnerabilities in the past two weeks, after the Fiscal Advisory Council’s criticisms on fiscal policy.
The NCC makes several points about the risks, both external and internal, to Ireland’s ongoing prosperity. The external risks – trade wars, the international tax environment, Brexit – are well known, but their importance to Ireland is magnified by its economic model of attracting FDI, its small and open structure and its close relationships, both geographically and economically, to the US and UK.
Goodbody Stockbrokers warn that Ireland can do little about these outside risks, but it can get its own house in order. The report makes the point that a small number of firms play a very large role in Ireland’s productivity and output performance and this hides a majority of firms where productivity is stalling or even falling. Goodbody say this can be improved through investment in R&D and human capital. It also includes calls for further progress in housing and critical infrastructure.
According to Goodbody Stockbrokers, "Economic growth can often hide underlying vulnerabilities. This was certainly the case in the 2000s when a deterioration in competitiveness was hidden by the rapid, credit-driven expansion. With costs now rising at a fast pace in some areas, competitiveness is under threat again. Given Ireland’s economic structure, that
also means that growth is also threatened."