Monthly Archives: October 2015

I attended my first meeting of the Export Trade Council on Tuesday last. There was a full turnout of all five Ministers and related Agencies involved in Ireland’s trade, tourism and investment activities. I was going to write “activities abroad” but in fact that would not quite capture the mandate of the Council or the kind of discussions it generates. The value of the ETC is the upstream coherence it brings at headquarters, a key nexus that facilitates coherence abroad for our agencies and Embassy network, and the involvement of the private sector.

The domestic platform featured in several discussions at the Council, all chaired of course by the Minister for Foreign Affairs and Trade Charlie Flanagan. The discussions were particularly enhanced by the strong representation of the private sector on the Council. One discussion, led by Minister Simon Harris, was on the implementation of the Irish Financial Services 2020 Strategy, an ambitious development of the sector’s international reach aiming to increase employment at home from the current 35,000 to 45,000.

There was a very useful presentation by private sector member Pat Beirne on the future of manufacturing in Ireland. This is a timely subject since manufacturing – a stable of the first industrial revolution – is now featuring again at the forefront of technology thanks to 3-D printing, the “internet of things”, data analytics and changes wrought by the digital revolution to supply chains. What is now being termed the industrial revolution 4.0 is likely to be disruptive with all the challenges and opportunities that presents. Minister Richard Bruton responded to this as well as to the previous Council discussion earlier this year on SME financing.

The Council’s session updating members on current strategies was chaired by Minister Seán Sherlock who has special responsibility for trade in our Department.  Enterprise Ireland, the IDA, Tourism Ireland, Bord Bía, Culture Ireland, and Science Foundation Ireland all reported positive progress, even in the current challenging global economic climate.

Minister for Education Jan O’Sullivan updated the Council on the forthcoming international education strategy. When you consider that international education is Australia’s fourth largest export, you can see its potential contribution to the Irish economy. She also led on the discussion on bridging the skills gap, a strategically crucial element for the development of our economy.

In the context of the update on the buoyancy in the tourist sector Minister Paschal O’Donohoe opened the discussion on the current uncertainties in the global economy that bear heavily on us given our openness. Minister Simon Coveney noted that fair winds like competitiveness and exchange rates can change: their favourable orientation now gives us a window to drive our exports.  As he pointed out, our future economic resilience is enhanced by diversifying our market outlets, penetrating new markets and growing our market share as widely as possible.

That our export performance is fundamentally based on domestic coherence was summed up by a great initiative underway and beautifully summed up by EI’s Julie Sinnamon as a ‘Trade Mission to Ireland’. It is a joint project by the IDA and EI to explore and exploit opportunities for Irish indigenous companies in our thriving multinational corporation sector so that they can enter the global supply chain via Irish based FDI companies.

The Export Trade Council was established in 2011 to strengthen cooperation and coordination across all Government Departments and State agencies involved in the promotion of trade, tourism and inward investment (FDI). It specifically oversees the implementation of the Government Trade, Tourism and Investment Strategy, ‘Trading and Investment in a Smart Economy’, which was published in 2010 and reviewed last year. Given its critical role in ensuring coherence, at the conclusion of this week’s Council, Minister Flanagan invited all members to reflect on the Council’s work to date and to consider how the body can enhance what it does to ensure that Ireland can “trade and trade better.”

Eamonn McKee

DG, Trade Division

Department of Foreign Affairs and Trade

Thanks to my colleagues at the Department of Finance, here’s a quick health check of the Irish economy and our public finances.

Growth is expected to exceed 6% in 2015 –the highest in the OECD. Breaking this down shows nominal GDP at 6.9%, real GDP at 4% and real GNP at 3.9%. This puts Ireland at the top of the EU league in growth terms. While estimates are slightly lower for subsequent years – real GNP at 3.5% in 2016 for example – this testifies to a resilient growth glide through to 2020.

Our export growth has been strong this year with second quarter growth of 13.6% in year-on-year terms. Our trade surplus is at near historic highs. While emerging markets are weakening, our traditional partners in the UK, US and EU are performing well, helping to sustain our exports. The lower Euro is also a boost in non-EU markets.

Consumer sentiment in Ireland is at a nine year high, personal consumption is rising, and retail sales are very strong this year, up 9% to end-August year on year. We remain competitive with unit labour costs growth at 2%, well below euro-area average.

Looking at our national finances, it is fair to say that we are back on track after some very tough years. This has come at a price and is thanks to fiscal discipline and public fortitude; namely budget consolidation of €30bn or 17% of GDP over the seven years since 2008. Current figures back up the turnaround in the national accounts, a very significant achievement by any standard and an enhancement of our financial/investment reputation that will stand us in good stead. Ireland is a consistent over-achiever on the excessive deficits targets. An underlying general government deficit of 4.0% of GDP for 2014 was below the target ceiling of 5.1%. The Stability Programme Update forecasts a deficit for 2015 of 2.3% of GDP. Our debt-GDP ratio, which peaked in 2012 at 120%, should hit 100% this year and is on target to achieve 60% over the coming years.

Employment is growing steadily, hitting 3% is the second quarter this year, with unemployment dropping from 12.2% at the start of 2014 to 9.4%.

In short, Ireland continues to progress across four key areas –strong economic growth, increased domestic activity, stable bond yields and improving employment statistics.

There is no room for complacency though. The fair winds of our competitiveness and international exchange rates can change. China and emerging markets are weakening (average growth has declined for the past five years) and the IMF predicts that global growth this year will be the slowest since the crash at 3.1%. Yet the recovery in Ireland is increasingly broad-based, with growth in 12 of 14 sectors. Sustaining this and our robust investment and export performance will define not just our prosperity but our resilience. That topic was a central one in yesterday’s meeting of the Export Trade Council of which more anon.

Eamonn McKee

DG Trade Division

Department of Foreign Affairs and Trade