MFA: Strategic opportunities for foreign exporters
Ireland suffered the deepest fall in GDP of the entire EU during the second lockdown (November 2020). According to Eurostat data, there was a drop of 5.1% in the fourth quarter of 2020. This was the sharpest quarterly economic decline in the entire EU in the given quarter. Despite this, the economy grew throughout 2020.
According to the European Commission’s forecasts published in March 2021, Ireland was the only EU economy to show positive year-on-year growth in 2020. The European Commission’s analysis attributes this result to exports abroad, especially products of the pharmaceutical and computing sectors, and also to temporarily increased consumer demand after the lifting of anti-pandemic measures in the third quarter of 2020.
The covid-19 pandemic has resulted in an increase in the unemployment rate to 25%. This is a figure that also includes people receiving support under the pandemic program, the traditional unemployment rate in January 2021 was 5.3%.
The Irish state spent more than €24 billion in 2020 to support the economy in the context of the coronavirus pandemic, which represents 6.1% of GDP. The Irish government plans to spend €28 billion by the end of 2021, which is equivalent to 6.7% of GDP. This amount includes EUR 1billion of expenditure measures (EUR 10 billion goes to income support, EUR billion goes to income measures such as tax deferrals, EUR 5 billion goes to direct measures such as loan guarantees or loans. Public spending rose by 20% and Ireland saw the second biggest increase in spending in the EU related to the covid-19 pandemic. The total cost of coping with the pandemic represented 12.2% of the economy, roughly in line with the EU average.
The European Central Bank’s asset purchase program has reduced borrowing costs for the Irish government by 80 basis points at the 10-year bond level, meaning a direct interest saving of around €192m per year.
Another important sector for achieving environmental sustainability is energy based on renewable resources. This area offers a number of opportunities for manufacturers of equipment for wind, solar, bio or hydro power plants.
In December 2020, the Irish government created an Accelerated Digital Transformation Plan to streamline state reform and industrial transformation. Business digital services, which have grown faster than goods trading in recent years, have seen a boom during the covid-19 pandemic. Digital services enabling online delivery have been the least affected sector during the pandemic and experts expect rapid growth in Ireland post-pandemic.
According to allcountrylist, services such as telemedicine, online education, digital entertainment and remote work, which were once so important, have now become an important part of the economy. Cybersecurity and data protection have now become a major issue due to insufficiently secured infrastructure, as working from home, especially in areas such as the financial sector or accounting, requires a well-secured IT infrastructure.
The process of industrial automation was already on the rise before the covid-19 pandemic, but as a result there was an increased demand. As epidemiological measures have necessitated production and distribution shutdowns, many manufacturers are increasingly looking for ways to future-proof the production process, which opens up opportunities for companies specializing in industrial automation and robotics.
Given that active tourism in the field of health services in the Czech Republic will probably need a longer period of time to recover, there is an opportunity to promote the spa sector with its convalescents in Ireland. A big competitive advantage is high quality at a much lower price than in other European destinations. At the same time, it is also possible to focus on some specifics, e.g. the treatment of respiratory diseases, which occur in Ireland to a relatively high degree.
In the case of the Czech Republic, the field of telemedicine would also offer significant export potential.
Covid-19 has caused an increase in the prices of construction materials such as timber, steel, bricks, glass etc. in Ireland. Demand from distributors and industry for alternative suppliers is increasing, not only due to the effects of the pandemic, but also due to the consequences of Brexit on the island of Ireland. It is this industry that represents a great opportunity for manufacturers of these products.
In the period after the covid-19 pandemic, the trend towards ecological sustainability will continue, which also includes the construction of environmentally friendly buildings. The Irish government’s policy in this direction is very ambitious, especially with regard to its efforts to quickly achieve carbon neutrality, and it spends considerable resources on this goal.