Irish export growth to slow but strong outlook for FDI – NIB


30 Aug 2011

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National Irish Bank has reduced its forecast for Irish export growth in 2011 from 7pc to 5.5pc, but says the country could experience significant growth in its foreign direct investment this year.

Despite a strong performance in the first three months of 2011, Irish export growth for the rest of the year is likely to be negatively impacted by the slowdown in the world economy, according to the latest National Irish Bank FDI Report.

“The global financial markets have been hit by a nasty cocktail of worsening macro-data and rising discontent among policymakers, which is affecting the outlook for Ireland’s key markets in the US and Europe,” said the report’s author, National Irish Bank’s chief economist Dr Ronnie O’Toole. “A low-growth scenario for the coming two to three years seems increasingly likely in these markets.”

According to the report, 2011 will be a strong year for Irish FDI, with UNCTAD (United Nations Conference on Trade and Development) reporting that €2.5bn of greenfield foreign direct investment into the county was announced between January and April.  The report notes that this is already more than half the total for 2010 and, if continued for the rest of the year, would equate to a 60pc increase for the year as a whole over 2010. 

“The continued strength of FDI flows into Ireland signals a clear positive,” said O’Toole. “Given this sign of medium-term strength, we are leaving our export forecasts for Ireland in 2012 unchanged.”

The report also lists UNCTAD figures, which reveal that of the 149 policy measures adopted globally in 2010 affecting foreign investment, 101 (67pc) moved towards further investment liberalisation, while 48 (33pc) introduced new restrictions to investment.

The report maintains that most of the new measures are being taken by developing countries as they play catch-up.  The additional liberalisation by developing and transition countries has pushed their share of FDI past 50pc in 2010 for the first time ever. 

“This is positive for Ireland in so far as a general move to restrict internationalisation would have disproportionately impacted on economies that are very open to international trade and investment,” said O’Toole.  “However, it also serves to emphasise the competitive threat from developing countries, who continue to embrace the benefits of liberalisation.”

Article courtesy of Businessandleadership.com

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