IRELAND: The Survey, presented in Dublin by OECD Secretary-General Angel Gurría and Ireland’s Finance Minister Michael Noonan, says the Irish economy is on a sounder footing than before the crisis.
Unemployment is falling, the fiscal deficit continues to narrow, public debt is on a downward path, the banking sector has been restructured and recapitalised and the public administration has become more efficient. After posting an OECD-leading growth rate of 5.2% in 2014, the Survey projects Irish GDP will grow by 5% in 2015 and 4% in 2016.
Ireland is the ‘comeback kid’ of Europe’s crisis-hit economies, and much of the credit for this strong recovery goes to the government’s steadfast commitment to reform,” Mr Gurría said. “To avoid repeating past mistakes, now is the time to build resilience against future nasty surprises while ensuring the recovery is sustained, and its benefits broadly shared.”
To make growth more inclusive, Ireland’s top priority should be further reducing the still-high levels of post-crisis unemployment, particularly for youth and the long-term unemployed. To boost skills, the government should continue with plans to improve the apprenticeship system and other forms of training. Remaining unemployment traps should be eased, for instance by slowing the withdrawal of housing and family income supplements as income increases. Relative to the average wage, Ireland has the highest child care costs in the OECD, so improving affordability is essential, particularly for low-income families.
Additional efforts are also needed to further strengthen the banking system, the OECD said. While the stock of non-performing loans is falling, the number is still high, and their resolution is being held up by a slow legal system. The property market needs to be carefully monitored, and further regulatory measures taken if credit growth starts to drive up prices.
The Survey encourages Ireland to take advantage of the strong economic recovery to accelerate the reduction of the government’s deficit and put public debt, which stands at 108% of GDP, on a more steeply declining trend. The Survey also suggests Ireland enact further reforms to increase productivity, particularly among Small and Medium-Sized Enterprises (SMEs), which is the key to raising living standards over the long-term. To achieve this goal, public support for innovation should be rebalanced in favour of direct supports, which are more relevant to smaller firms than the tax incentives that currently predominate.
Intensifying competition in legal services, ports and utilities would benefit all firms, as would improvements to infrastructure and public transport. SMEs should also receive better support to access the global talent pool.
Overview of the Economic Survey, with the main conclusions, is freely accessible on the OECD’s web site