Despite many countries in Europe seeming to be heading for a recession, Ireland appears to be bucking the trend as it was found to be the EU’s fastest-growing economy.
As its closest neighbour, the UK’s economy continues to shrink, Ireland’s economy has proved to be the most impressive and resilient in Europe. New figures show that Ireland boasts the fastest-growing economy in the EU.
There seems to be a variety of reasons for this unexpectedly strong growth. Among the most important are the influence of multinational companies and the workforce’s ability to adapt to the Covid-19 pandemic.
The Irish economy – growing better than expected
Over the last year, the Irish economy grew by 12.2% – much more than expected. This was an especially impressive feat given the severe cost-of-living crisis in 2022 and the slowdown in the global economy.
The eurozone managed to avoid a recession even as interest rates rose, energy costs soared, and market confidence waned. According to Eurostat, the eurozone just about managed to generate some growth in the final three months of 2022.
GDP in the eurozone expanded by 0.1 per cent in the fourth quarter, outperforming expectations in a Reuters poll of a 0.1 per cent drop.
This was quite a bit ahead of government forecasts, and it also happened to make Ireland the fastest-growing economy in Europe.
How Ireland is defying the odds – the importance of multinationals to the Irish economy
This defying of the odds in terms of economic growth has mainly been credited to the fact that Ireland’s GDP growth figures were positively skewed thanks to the outsized role that multinationals have played in the overall strength of the Irish economy.
The pharmaceutical sector has performed brilliantly in Ireland as it has continued to trade strongly despite international troubles.
The ability of Ireland’s workforce to adapt to the Covid-19 pandemic has also helped the economy to outperform expectations.
Growth in 2023 – potentially amongst the weakest on record
While the EU has managed to perform better than initially feared despite the challenges posed by the pandemic, Russia’s invasion of Ukraine, and the cost of living crisis, experts predict growth in 2023 to be amongst the weakest.
This owes primarily to the significant drop in incomes and surging interest rates.
Among the EU’s biggest countries, Italy and Germany’s economies failed to perform as well as Ireland’s. Spain and France’s economies, on the other hand, also expanded.