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- GDP (PPP):
- $188.9 billion
- -0.3% growth
- -1.1% 5-year compound annual growth
- $39,547 per capita
- Inflation (CPI):
- FDI Inflow:
Ireland’s economic freedom score is 76.6, making its economy the 9th freest in the 2015 Index. Its score is up by 0.4 point from last year, with a notable combined improvement in the management of government spending and monetary freedom outweighing declines in half of the 10 economic freedoms including property rights, labor freedom, and freedom from corruption. The Irish economy is ranked third out of 43 countries in the Europe region, and its score is far above the world and regional averages.
Two years of gains in economic freedom have not totally reversed losses earlier in the past half-decade. During that period, Ireland’s economic freedom has declined by over 2.0 points, with ratings for freedom from corruption and business freedom recording the largest declines.
This erosion of economic freedom has undermined competitiveness and hindered economic recovery in a difficult external environment. Nonetheless, by adhering to its commitment to policies that sustain open markets and reducing the costs of a bloated public sector to restore fiscal soundness, Ireland has been able to reemerge as one of the world’s 10 freest economies.
Prime Minister Enda Kenny’s Fine Gael government was elected in February 2011. Ireland’s modern, highly industrialized economy performed extraordinarily well throughout the 1990s and most of the next decade, encouraged by free-market policies that attracted investment capital. However, a speculative housing bubble burst in 2008 and generated a financial crisis. A 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. The policy agenda aims to get the economy back on a solid footing by 2015. In February 2013, Ireland reached agreement with the European Central Bank to restructure loans and ease the debt burden incurred when the Anglo Irish Bank was nationalized in 2009. Ireland’s economy was expected to grow in 2014, but the ratio of public debt to GDP remains very high.
More than four-fifths of the Irish think that corruption is a major problem, according to a 2014 EU report. Corruption, including cronyism, political patronage, and illegal donations, is in fact a recurring issue. Nevertheless, contracts are secure, and expropriation is rare. Ireland’s legal system is based on common law, and the judiciary is independent. Property rights are well protected.
Ireland’s top individual income tax rate is 41 percent, and its top corporate tax rate is 12.5 percent. Other taxes include a value-added tax and a capital gains tax. Total tax revenue is equivalent to 28.3 percent of domestic output. Government expenditures equal 42.6 percent of gross domestic product, and public debt corresponds to 123 percent of the size of the domestic economy.
Launching a business takes four procedures and six days, and no minimum capital is required, but obtaining necessary permits takes 150 days on average. Relatively flexible hiring and dismissal regulations sustain an efficient labor market. Monetary stability has been relatively well maintained. Prices are generally set by market forces, but the government subsidizes some industries (e.g., wind energy).
EU members have a 1.0 percent average tariff rate. Although some non-tariff barriers exist, the EU is relatively open to external trade. Ireland has few barriers to international trade and investment. Foreign and domestic investors are generally treated equally under the law. Massive recapitalization and restructuring since 2009 have changed the banking sector substantially. Major domestic banks have become almost fully nationalized.