July Trade & Investment Report
Brian Cotter - Public Affairs Director
A recent analytical note from the IMD World Competitiveness Yearbook asked if there is a relationship between political systems and competitiveness. Despite some headline divergences, their data suggests a positive correlation between democracy and prosperity. In the end, functioning democracies enable good decision making and hence act to support the building of social, intellectual and institutional capital that can drive economic development.
Ireland's Government consults widely with stakeholders on a broad range of matters. Presently, it is considering how the Irish tax regime might respond to the international tax debate in the context of the OECD's work on base erosion and profit shifting (or BEPS). The Chamber's input will reflect the fact that Ireland has enjoyed a long term competitive, compelling and certain tax environment for FDI. While acknowledging that Ireland's tax system in the current climate must be a sustainable one which is seen as 'fair', it is important that Ireland's regime remains fit for purpose to retain and attract its continuing share of foreign investment. Our recommendations will seek to identify how changes would impact Ireland's ability to retain and attract both investment and employment.
To support a competitive tax environment, the Chamber's President, Louise Phelan, recently wrote to the Minister for Finance underlining our continued opposition to the introduction of the Financial Transaction Tax and our support for the Government's position on FTT. You can read that submission here.
Key Economic Indicators
Arrow Direction indicates direction of trend;arrow colour indicates whether trends are perceived as positive (Green) or negative (red).
(f) = forecast
All Irish figures sourced from Central Bank of Ireland Quarterly Bulletin
Figures positive as economy continues to grow
The latest Quarterly National Accounts, published by the Central Statistics Office, indicate that on a seasonally-adjusted basis there was a 2.7% increase in GDP in the first quarter of this year compared to the fourth quarter of 2013. GNP rose by 0.5% over the same period. The CSO have also revised their figures for 2013 which now indicate that GDP grew by 0.2% not contracting by 0.3% as previously estimated.
Exports were €1,166m higher in the first quarter of 2014 compared with the corresponding quarter of 2013. A new EU wide methodology has added €8b to GDP for 2013 than was calculated under the previous method. Of particular relevance, the treatment of R&D spending has changed from being treated as a cost to being regarded as investment. This change alone added 4.1% to the GDP figure.
Similarly positive news was issued recently on the public finances by the Department of Finance. This shows that Ireland's deficit was just under €5b in first half of 2014, a €1.7b improvement on last year. Meanwhile tax revenue was up €868m (4.9%) on the same point in 2013 and €221 (1.2%) ahead of profile.
Sources: CSO, Department of Finance
Businesses are increasingly confident
June saw the services sector grow at the fastest pace in seven years. The Investec Services Purchasing Managers Index (PMI) registered 62.6 in June up from 61.7 in May. This was the highest reading since February 2007. The sub-index for employment rose to 59.6 from 56.6, the 22nd month of continuous job growth and the second-highest reading since October 2006.
Meanwhile Ireland's manufacturing sector continued to expand in June, posting growth for the 13th month in a row as measured by the Investec Manufacturing PMI. June's reading of 55.3 was up marginally from the reading of 55.0 in May. The new orders sub-index expanded at the quickest pace since February 2011 while employment in the sector continued to expand.
Source: The Irish Times
IDA report strong FDI flows into Ireland
IDA Ireland has stated the country's foreign investment performance was ‘buoyant' in the first-half of 2014, with a growing number of new greenfield investments, expansions and transformations by existing companies.
Over 100 investments were secured in the first six months of 2014, compared to 70 at the same time last year. Of the investments secured, 40% have come from companies investing in Ireland for the first time, with the remainder represented by expansions and transformations by existing companies. Delivering an update for the first six months of the year, IDA said the projects approved during the first half of 2014 will lead to the creation of 8,000 jobs this year and over future years as the companies roll out their investment plans.
UNCTAD forecast renewed global FDI growth
The latest Global Investment Monitor from UNCTAD identifies ‘cautious optimism' returning to global FDI. After the 2012 slump, global FDI returned to growth, with inflows rising 9% in 2013, to $1.45 trillion. UNCTAD projects that FDI flows could rise to $1.6 trillion in 2014, $1.7 trillion in 2015 and $1.8 trillion in 2016, with relatively larger increases in developed countries. They warn however that ‘fragility in some emerging markets and risks related to policy uncertainty and regional instability may negatively affect the expected upturn in FDI.'
FDI flows to developed countries increased by 9% to $566 billion, representing 39% of global flows, while those to developing economies reached a new high of $778 billion, or 54% of the total. The balance of $108 billion went to transition economies. You can read the full report here.
Source: United Nations Conference on Trade and Development
American Chamber debates TTIP with Foreign Affairs Committee
American Chamber of Commerce Ireland Chief Executive, Mark Redmond, and Public Affairs Director, Brian Cotter, recently addressed the Joint Oireachtas Committee on Foreign Affairs and Trade to discuss the Transatlantic Trade and Investment Partnership (TTIP). Mr. Redmond spoke of the potential benefits for Ireland from a comprehensive deal: "As a key partner in Corporate America's EU network, Ireland is likely to emerge as a significant beneficiary of a successful free trade deal. Analysis carried out by the Centre for Economic Policy Research, a leading independent pan-European economic research organisation predicts that an ambitious TTIP deal would increase the size of the EU economy by around €120 billion (or 0.5% of GDP) and the US by €95 billion (or 0.4% of GDP)."
Taking the opportunity to highlight the many potential positives of TTIP for Ireland Mr Redmond reminded the Committee members that Ireland exports 80% of everything we produce: "A TTIP that eliminates tariffs and reduces non-tariff barriers will result in significant gains in trade between Ireland and the US. It will allow smaller Irish companies access new markets and export opportunities which are currently out of their reach or difficult to exploit. This should deliver additional jobs as well as greater choice for consumers". Mr. Redmond concluded "The American Chamber of Commerce Ireland will continue to support the efforts of both sides to reach an ambitious and comprehensive agreement for the benefit of the Irish economy and the wider transatlantic economy".
Online advertising platform company AdRoll is to add 100 jobs at its Dublin office, bringing the total number of people it expects to employ there to 220. The company, which officially opened its new Dublin office recently, already employs 75 people at its EMEA headquarters. AdRoll are currently recruiting in its sales, account management, business development, finance and engineering sectors.
Source: The Irish Times
Innovative, a global leader in library technology, is adding 25 new jobs at its EMEA HQ in Dublin, bringing employment to 50 by the end 2015. The company's software is installed in various types of libraries including academic, public, consortia, school, medical and law. Innovative currently employs 25 people in customer and technical support, software development, system analysis and finance.
Medical device company, NuVasive Inc, has established an International Operations Centre in Waterford, creating up to 30 highly skilled roles over the next two to three years. NuVasive has begun hiring supply chain, customer service, accounting, and IT positions. Based in San Diego, California, NuVasive is an innovative medical device company focused on developing minimally disruptive surgical products and procedures for the spine.
PayPal is to create 400 new jobs based at its eBay Inc. European Operations Centre in Dundalk. These positions are in addition to the 1,000 announced in 2012. The expansion will bring the combined PayPal and eBay employee numbers in Dundalk to 1,850 by 2018, and their total Irish workforce to 2,900. PayPal is recruiting roles in the areas of customer solutions, risk operations, merchant services, telesales and operational excellence.
Zendesk, a provider of cloud-based customer service software, officially opened its new Dublin office in June. The company have announced their intention to boost their workforce to 150. Zendesk more than doubled its headcount in the most recent 6 months to 52 employees.