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- GDP (PPP):
- $257.4 billion
- 7.8% growth
- 3.4% 5-year compound annual growth
- $55,533 per capita
- Inflation (CPI):
- FDI Inflow:
Ireland’s economic fundamentals remain strong, well supported by solid protection of property rights and an independent judiciary that enforces the rule of law effectively. Commitment to open-market policies that facilitate global trade and investment flows has been well institutionalized, and the economy has demonstrated admirable resilience in the face of recent years’ international and domestic challenges.
Undertaking politically difficult reforms, including sharp cuts in public-sector wages and restructuring of the banking sector, Ireland has regained its macroeconomic stability and competitiveness. With the management of public finance back on a sounder footing, the deficit is declining, although the level of public debt remains quite high.
Prime Minister Enda Kenny of the center-right Fine Gael heads a minority government after losing a parliamentary majority in February 2016 elections. Ireland’s highly industrialized economy performed extraordinarily well throughout the 1990s and most of the 2000s, encouraged by free-market policies that attracted investment capital, but the burst of a speculative housing bubble in 2008 generated a financial crisis. The 2010 National Recovery Plan was implemented after the government nationalized several banks, and Ireland accepted a $90 billion European Union–International Monetary Fund rescue package. Widening economic disparities between Dublin and the rest of the country have become a source of political debate.
Property rights are well protected, and secured interests in property are recognized and enforced. Contracts are secure, and expropriation is rare. Ireland’s legal system is based on common law, and the judiciary is independent. Allegations of outright public corruption are investigated and prosecuted, but cronyism remains a recurring problem that affects all levels of Irish politics.
The top personal income tax rate is 41 percent, and the top corporate tax rate is 12.5 percent. Other taxes include a value-added tax and a capital gains tax. The overall tax burden equals 29.9 percent of total domestic income. Government spending has amounted to 37.8 percent of total output (GDP) over the past three years, and budget deficits have averaged 3.7 percent of GDP. Public debt is equivalent to 78.7 percent of GDP.
The streamlined regulatory process is very conducive to dynamic investment and supports business decisions that enhance productivity. The nonsalary cost of employing a worker is low, and the severance payment system is not overly burdensome. In November 2015, the government rejected calls to impose rent controls but did act to restrict landlords to rent increases every two years instead of annually.
Trade is extremely important to Ireland’s economy; the value of exports and imports taken together equals 222 percent of GDP. The average applied tariff rate is 1.5 percent, and there are relatively few barriers to international trade and investment. Recapitalization and restructuring have taken place to restore banking-sector stability. The state still retains its ownership in banks, but there has been some divestment.