IRELAND\\\


year, “it will surely be better than 2020”, he says. He adds that Ireland can also


Incredibly, Ireland managed to record positive growth in gross domestic product (GDP) in 2020, despite the twin assaults of Covid and Brexit in the UK. According to Eoin Burke-Kennedy, writing in the Irish Times in early January, while the economy fell into recession in the second quarter of 2020 - aſter recording


consecutive quarters


of negative growth - in the third quarter it rebounded strongly from the first lockdown, with11% growth on the back of resurgent consumer spending and exports. The modest economic growth


makes Ireland the fastest growing economy in the world at the moment, behind China. Nevertheless,


be significantly curtailed in 2021 because of the pandemic. However, the number of investments secured in 2020 (246) was similar to that for 2019 (250). One bright spot is the


performance of the internationally traded sectors, evident in the expansion of output and exports in 2020.


Bank AIB said that November


exports increased by €2.1bn (+17%), while imports increased by €1.5bn (+21%) leading to an increase in the trade surplus to €6bn (+12%). In total, exports are up by 6% on a year to date basis, while imports are down 7% in the year to date. Investment firm Davy says


Ireland remains


in a precarious position, he says. Coronavirus infections continue to run rampant and distribution of the vaccine has got off to a relatively slow start, compared with the UK, so it’s a bit early to break out the bunting. And, as Burke-Kennedy points,


while GDP may be growing, it doesn’t necessarily feel like that in the (virtual) queue at the labour exchange. GDP is oſten inflated by large transactions by multinationals so domestic demand, personal consumption, investment by firms and government spending are maybe a more accurate reflection of the real economy. The head of the state agency


responsible for securing foreign direct investment – an important component of the Irish economy - has meanwhile warned that inward investment is likely to


that recent data showed that Irish export performance, driven by the multinational sector, will make a strong positive contribution to GDP growth in the fourth quarter of 2020 and, probably, into 2021. Central Bank governor Gabriel


Makhlouf, in a speech to the University of Limerick on 25 January, added that strong export growth from the pharmaceutical, medical devices and IT sectors spearheaded economic growth last year and will remain resilient this year and the next. He added that with a Brexit ‘no-deal’ avoided, “Irish firms that export abroad should benefit from a post- Covid international recovery, notwithstanding


the Irish increased


trade frictions under the new EU- UK arrangements.” Another


Times


correspondent, Cliff Taylor, looks ahead to the expected easing of Covid restrictions later this


Bumpy conditions ahead for Irish airfreight


Nearly a year into the pandemic, the Irish airfreight market has “been through a few twists and turns”, says Ian McCool, managing director of Dublin-based Irish general sales agent International Airline Marketing (IAM). “Most carriers dramatically


reduced of cancelled their air services to Ireland by the end of March. Some did not restart flights to Ireland and others restarted only slowly,” he says. As a result, overall capacity fell by close on 90% out of


Ireland while demand fell by around 45% in the early months of the year. The fall in demand was a mix


of factors. Some international markets remained in lockdown and demand for certain products was reduced. At the same time, the basic economics of supply and demand resulted in increased costs and made it uneconomic for certain products to move by air freight at the new, substantially higher, rates.


12 >>


year. As the numbers vaccinated slowly increase, this should, by the second half of the year, allow for a fuller reopening of business and allow the economy to gather some momentum. While 2021 will not be a normal


take some cheer from the Brexit deal that was finally signed by the UK and EU at the end of last year. The Department of Finance says that the difference between a trade deal and no deal could be worth as much as three percentage points on Ireland’s GDP growth in 2021, so the original forecast of 1.7% next year could now be over 4.5%. Davy has similarly revised up its GDP forecast to 4.8% in 2021


Issue 1 2021 - FBJ Ireland


(from 3.8% previously) and 5.5% in 2022 due to buoyant exports and multinational sector output, though fresh Covid-19 restrictions will depress activity in the first half of 2021. Recovery should gradually set


in this year, says Taylor, but it will be “ the backdrop of a massive hit to the consumer-facing parts of the economy…The pandemic has severely damaged some parts of the economy and leſt others largely untouched.” Massive government support


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has though gone a way to support businesses and people out of work. Helping them rebuild their economic prospects will be the big challenge of the second half of this year and 2022. Taylor says: “We are still looking


through a fog at our post-pandemic future, but at least the arrival of the vaccine brings real hope that, sometime this year, the worst really will be behind us. The speed at which vaccinations will take place is now the key economic variable of 2021.”


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