IDA sees 'significant downside risks' to growth targets this decade

The IDA is likely to face much more pressure in attracting inward foreign investment in the next few years, with its chief executive saying "significant downside risks" will exist over its next five-year strategic cycle.

IDA sees 'significant downside risks' to growth targets this decade

The IDA is likely to face much more pressure in attracting inward foreign investment in the next few years, with its chief executive saying "significant downside risks" will exist over its next five-year strategic cycle.

The agency is due to launch its strategy for the next five years, up to the end of 2024, during the first quarter of this year and chief executive Martin Shanahan said its next set of investment and job targets will face challenges from subdued global economic growth, international trade tensions, economic corrections in key source markets, rising protectionism, higher living and business costs, and a tighter labour market.

He also said that, while Ireland continues to punch above its weight, competition for investment from Mediterranean and Eastern European countries is increasing.

That said, Mr Shanahan said he expects momentum from a strong 2019 to continue into this year, with a strong first half to 2020 likely and a "reasonable" outlook for the full year probable.

The IDA's 2019 figures show record total employment from overseas-owned companies standing at 245,096.

A slightly lower annual net jobs gain - of 13,867 - was balanced out by a drop of nearly 1,000 in the number of job losses during the year.

Of the 250 investments made by overseas firms in Ireland last year, 157 were from North America, with 65 from the rest of Europe and 28 from growth markets.

But, the IDA's policy of limiting its inward investment over-reliance on North America is beginning to bear fruit, with 37% of investment coming from outside of North America last year, up from 30% in 2018.

To date, Ireland has attracted 90 investments and 5,500 jobs from companies having to relocate due to Brexit.

Mr Shanahan said any further wave is unlikely until it is clear what relationship the UK will have with the EU beyond the end of 2020.

In the last five years, the IDA achieved double its target for 35,000 net new jobs and comfortably beat its aim for total overseas investment-related employment of 209,000.

Mr Shanahan said the agency is "absolutely committed to regional development" and that the regions will be "at the absolute centre" of the IDA's new five-year plan.

Nearly 76,000 IDA-related jobs were created outside of Dublin in the past five years, with every region hitting its 30%-40% investment increase target.

In order for us to continue to grow FDI in the regions we need delivery on what the Government has committed to and funded for...We need to see infrastructure that was committed to executed on and delivered.

On further OECD international tax rule proposals, Mr Shanahan said Ireland has no need to be fearful and that a consensus on tax rules could benefit all countries in that they will be clear on what the playing field looks like.

He said there has been no indication that potential investors are thinking differently on Ireland due to tax proposals.

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