Competitiveness Survives, Despite Recession, Says Report

Ireland remains in a good position to compete, despite the global economic slowdown.

The National Competitiveness Council (NCC), which reports to the Taoiseach on key competitiveness issues facing the Irish economy has just published its Annual Competitiveness Report.

Called 'Benchmarking Ireland's Performance', the report provides an assessment of the competitiveness strengths and weaknesses of the Irish economy relative to competitor countries.

According to the authors, the Irish economy is experiencing a rapid and painful adjustment to the 'bursting of the property bubble', the international financial crises and the downturn in world trade.

As a small, open and competitive economy, Ireland prospered from an export boom driven by globalisation and investment in the 1990s and early 2000s.

In recent years, strong growth in the domestic economy, driven by housing and consumption, replaced exports as the key driver of growth.

"Though economic growth rates remained strong, our international competitiveness weakened as the domestic boom increased the costs of doing business here and as reforms to improve competitiveness were delayed," the authors commented.

However, Ireland's competitiveness position, while weakening over a number of years, has not changed dramatically in the past year.

The recent rapid decline in national income is primarily a reflection of the collapse of the property market and its effects on the wider economy.

Ireland continues to retain a range of important competitive strengths including a young and comparatively well educated workforce, improving infrastructure, growing levels of research and development activity, a modern internationally trading enterprise base and a long track record as a successful location for overseas investors.

The report also said that the ability of Ireland to protect the gains in living standards of recent decades and to secure future increases rests on an ability to succeed as competitive exporters of high quality goods and services on international markets.

The report highlights that Irish exporters have performed relatively well.

While Irish exports of goods and services are expected to decline by 3.9% in 2009, the forecast is that exports will fall by 16.5% overall.

The fall in the value of sterling is noted as a significant challenge, particularly for indigenous exporters who are focused on the UK market and compete against UK firms in other markets.

The NCC believes that targeting export-led growth is the only sustainable strategy to maintain living standards and to secure long term prosperity.

The Irish economy needs to respond to the current crises and position itself to benefit from a global recovery by improving competitiveness.

"Given the severity of our current economic position, it is now time for Ireland to achieve a swift improvement in competitiveness across a range of areas," concluded the report.

(BMcC/KMcA