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- GDP (PPP):
- $192.2 billion
- 0.9% growth
- -1.2% 5-year compound annual growth
- $41,921 per capita
- Inflation (CPI):
- FDI Inflow:
Ireland’s economic freedom score is 76.2, making its economy the 9th freest in the 2014 Index. Its score has increased by 0.5 point from last year due to improvements in trade freedom, labor freedom, and the management of public finance that offset small declines in monetary freedom and freedom from corruption. The Irish economy has become the second freest economy in the Europe region and has regained a place among the world’s top 10 freest economies.
Over the 20-year history of the Index, Ireland has advanced its economic freedom score by almost 8 points, one of the 10 best improvements among developed countries. Score increases have occurred in five of the 10 economic freedoms, including improvements of 20 points or more in freedom from corruption, fiscal freedom, and investment freedom. Ireland ranked among the world’s “free” economies from 2001 to 2010 and, while it has fallen back to “mostly free” status in recent years, is again on an upward trajectory.
Despite its recent difficulties, Ireland’s overall level of economic freedom has been consistently competitive, sustained by such institutional strengths as strong protection of property rights, a low level of corruption, efficient business regulations, and competitive tax rates.
Ireland is a member of the eurozone and ratified the European Union’s Lisbon Treaty in October 2009. 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, but in 2008, a speculative housing bubble burst. A 2010 National Recovery Plan, implemented after the government nationalized several banks and accepted a $90 billion European Union–International Monetary Fund rescue package, 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 Anglo Irish Bank was nationalized in 2009.
Contracts are secure and expropriation is rare, but corruption, including cronyism, political patronage, and illegal donations, is a recurring problem. In 2012, a former prime minister resigned from his political party due to perceptions of corruption. Ireland’s legal system is based on common law, and the judiciary is independent. An efficient, non-discriminatory legal system protects the acquisition and disposition of all property rights.
The top individual income tax rate is 41 percent, and the top corporate tax rate is 12.5 percent. Other taxes include a value-added tax (VAT) and a capital gains tax. The total tax burden is 27.6 percent of gross domestic income. Government spending is 48.1 percent of the domestic economy. Public debt still exceeds 117 percent of GDP, but ratings agencies have raised Ireland’s debt outlook in response to austerity measures.
With no minimum capital requirement, incorporating a business takes only four procedures and slightly longer than one week. Completing licensing requirements is not burdensome. The labor market remains relatively flexible, and labor costs are moderate. Monetary stability has been relatively well maintained, and prices are generally set by market forces, but the government subsidizes some industries (for example, wind energy).
EU members have a low 1.1 percent average tariff rate. Ireland has few barriers to international trade and investment. Domestic and foreign firms generally receive equal treatment under a competitive and efficient investment regime. The structure of the banking sector has changed significantly through massive recapitalization and restructuring. Considerable consolidation has taken place among domestic lenders.