National Competitiveness Council Ireland s Competitiveness S - - PowerPoint PPT Presentation

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National Competitiveness Council Ireland s Competitiveness S - - PowerPoint PPT Presentation

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National Competitiveness Council Ireland s Competitiveness S corecard 2011 1 NCC Competitiveness Pyramid Main Messages from Irelands Competitiveness Scorecard 2011 Positives Economic growth for 2011 & 2012 (likely to

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SLIDE 1

National Competitiveness Council

Ireland’ s Competitiveness S corecard 2011

1

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SLIDE 2

NCC Competitiveness Pyramid

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SLIDE 3

Main Messages from Ireland’s Competitiveness Scorecard 2011

Positives

  • Economic growth for 2011 & 2012 (likely to continue to be

driven by net exports)

  • Cost competitiveness continues to improve – but more is

required

  • Enterprise environment holding its own

 Productivity improvements  Ireland continues to attract and be attractive as a location for

investment

 Trade share increases

  • S

ignificant investment in physical infrastructure in past decade

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SLIDE 4

Ireland’s net exports continue to drive growth..

S

  • urce: CS

O Nat ional Account s

  • 12%
  • 10%
  • 8%
  • 6%
  • 4%
  • 2%

0% 2% 4% 6% 8% 10% 12% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Q1 2011 Percent age of GDP Consumpt ion Government Invest ment Net Export s

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SLIDE 5

..even more so than other economies

S

  • urce: Nat ional Account s

Components of Economic Growth 2010, Ireland, UK and Germany

  • 6%
  • 4%
  • 2%

0% 2% 4% 6% Ireland UK Germany Percent age of GDP Consumpt ion Government Invest ment Net Export s

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SLIDE 6

Cost competitiveness now at 2003 levels

75 80 85 90 95 100 105 110

Jan-00 Mar-00 May-00 Jul-00 Sep-00 Nov-00 Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 May-02 Jul-02 Sep-02 Nov-02 Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03 Jan-04 Mar-04 May-04 Jul-04 Sep-04 Nov-04 Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11

Nominal HCI R eal HCI Improvement Det eriorat ion

S

  • urce: Cent ral Bank, Forf ás calculat ions

Harmonised Competitiveness Indicators, 2000-2011 (Jan 2005= 100)

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SLIDE 7

But costs remain high relative to purchasing power

S

  • urce: Eurost at

Price levels and GDP per capita 2009

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SLIDE 8

Labour costs continue to fall in 2011, but cost gap with competitors remain

  • 3.0%
  • 2.0%
  • 1.0%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 Percent age change compared t o corresponding period of t he previous year Ireland EU 27 euro area-16

Labour cost index, annual and quarterly indicators S

  • urce: Eurost at

$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 Poland Hungary New Zealand S

  • ut h Korea

US S pain euro area-13 OECD 28 It aly UK France Net herlands Ireland S weden Japan Germany Finland Denmark S wit zerland Annual Wage (US $) Labour costs Net Wage

Labour costs and net wage 2010 S

  • urce: OECD, Taxing Wages
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SLIDE 9

Unit labour costs continue to decline, securing a competitive gain for Ireland

  • 5
  • 4
  • 3
  • 2
  • 1

1 2 3 4 5 6 7 2005 2006 2007 2008 2009 2010 Annual percent age change Ireland euro area-14 OECD-25

S

  • urce: OECD, Unit Labour Cost s, Annual Indicat ors
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SLIDE 10

Declines in ULCs has been driven by compositional effects

  • 20
  • 15
  • 10
  • 5

5 10 15 2005 2006 2007 2008 2009 2010 Annual Percent age Change

Manufact uring Indust ry Const ruct ion Trade, t ransport and communicat ion Financial and business services Market services Business sect or excl. Agricult ure

S

  • urce: OECD, Unit Labour Cost s, Annual Indicat ors
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SLIDE 11

Productivity growth rebounds after a decline in 2008-2009 (GNP terms)

S

  • urce: The Conf erence Board, Tot al Economy Dat abase

Annual Average Growth in Output per Hour Worked, 2005-2010

  • 1%

0% 1% 2% 3% 4% 5% 6% S

  • ut h Korea

Denmark Ireland GDP Japan Ireland GNP S weden US Net herlands Poland OECD 28 S wit zerland S pain UK New Zealand Hungary France It aly Finland Germany Average annual growt h rat e 2009-2010 2005-2009

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SLIDE 12

Ireland has one of the highest stock of FDI relative to income in the OECD (but scores are declining)

0% 20% 40% 60% 80% 100% 120% 140% 160% 180% 200% Hungary S ingapore Ireland GNP S wit zerland Ireland GDP Net herlands UK OECD 28 New Zealand S weden Denmark S pain France Poland Finland Israel US Germany It aly S

  • ut h Korea

India China Japan Percent age of GDP

2009 2005

FDI inward stock as a %

  • f GDP

, 2009 S

  • urce: UNCTAD World Invest ment

Report 2010

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SLIDE 13

Ireland’s share of world trade continues to grow

0.0 0.5 1.0 1.5 2.0 2.5 3.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 S hare of world t rade (% )

Irelands S hare of Total World Trade Irelands S hare of Merchandise Ireland's share of S ervices

S

  • urce: WTO Online

Ireland’s S hare of World Trade

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SLIDE 14

Ireland has invested significantly in infrastructure over the past decade..

€0 €100,000 €200,000 €300,000 €400,000 €500,000 €600,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Billion euro

Dwellings excluding land Other buildings & structures (incl roads) Roads Transport equipment Other machinery & equipment (incl office machinery & hardware) Cultivated assets Intangible fixed assets (incl computer software(

S

  • urce: CS

O, Est imat es of t he Capit al S t ock of Fixed Asset s

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SLIDE 15

However the perception of Ireland’s infrastructure quality remains poor

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 S wit zerland S ingapore France Finland S weden Germany Denmark Japan S

  • ut h Korea

Net herlands US S pain OECD 28 UK Israel New Zealand Hungary Greece Ireland It aly Poland Poor Qualit y Highly Developed

S

  • urce: WEF

, Global Compet it iveness Report 2010/ 2011

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SLIDE 16

010

Negatives

  • Public debt remains a serious risk
  • Unemployment remains a huge economic and social

problem

  • Access to credit remains an issue
  • Consumption remains subdued as deleveraging process of

private debt underway

  • Investment significantly down (but public investment

above EA 16 average).

  • Productive investment down also, but not as much
  • Number of concerning trends have emerged in the area of

Ireland’ s human capital (PIS A results)

Main Messages from Ireland’s Competitiveness Scorecard 2011

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SLIDE 17

Growth in Public Debt remains serious risk

S

  • urce: European Commission DG EcoFin, European Economic Forecast

S pring 2011

20 40 60 80 100 120 140 Percent age of GDP 2011F 2006

General Government Consolidated Debt as %

  • f GDP

, 2000-2011F

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SLIDE 18

Employment and Unemployment 2005- Q1 2011

S

  • urce: CS

O QNHS

50 100 150 200 250 300 350 500 1,000 1,500 2,000 2,500 2005Q1 2005Q2 2005Q3 2005Q4 2006Q1 2006Q2 2006Q3 2006Q4 2007Q1 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 Persons unemployed (000s) Persons in employment (000s)

In employment full-time In employment part-time Unemployed Long-term unemployed

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SLIDE 19

The stock of credit to enterprise has been negative since March 2009

  • 50.0
  • 40.0
  • 30.0
  • 20.0
  • 10.0

0.0 10.0 20.0 30.0 40.0 Dec-03 Apr-04 Aug-04 Dec-04 Apr-05 Aug-05 Dec-05 Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Annual Growt h Rat e (% ) Ireland euro area 12

S

  • urce: ECB
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SLIDE 20

Components of economic growth

S

  • urce: CS

O Nat ional Account s

  • 12%
  • 10%
  • 8%
  • 6%
  • 4%
  • 2%

0% 2% 4% 6% 8% 10% 12% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Q1 2011 Percent age of GDP Consumpt ion Government Invest ment Net Export s

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SLIDE 21

Significant fall in investment in Ireland since 2005

S

  • urce: Ameco Dat abase

Gross Fixed Capital Formation as a %

  • f GDP

5 10 15 20 25 30 35 Spain Poland Hungary Japan France Swit zerland It aly euro area 16 Finland Germany Sweden Net herlands Denmark US UK Ireland GNP Ireland GDP GFCF % GDP

Privat e sect or 2010 General government 2010 Tot al 2005

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SLIDE 22

Productive investment does not fall as much as overall private investment

12.5% 7.7% 14.7% 9.3%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 1999 2000 2005 2010 1995 2000 2005 2010 1995 2000 2005 2010 1995 2000 2005 2010 1995 2000 2005 2009 1995 2000 2005 2010 EU 27 euro area 12 Ireland GDP UK US Ireland GNP Product ive invest ment as a %

  • f GDP

S

  • urce: Ameco Dat abase
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SLIDE 23

Significant decline in PISA performance compared with 2006 results

400 420 440 460 480 500 520 540 560 580 S

  • ut h Korea

Finland S ingapore New Zealand Japan Net herlands S wit zerland Poland US Germany S weden Ireland France Denmark UK Hungary OECD It aly S pain Israel Index of lit eracy

Reading lit eracy Scient ific lit eracy Mat hemat ical lit eracy

S

  • urce: OECD PIS

A 2009 dat abase

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SLIDE 24

Policy Challenges

►Rebuilding Ireland’ s reputation and brand ►Improving living standards through innovating

and increasing productivity

►Ensuring viable enterprises have the credit they

require to grow and expand

►Maintaining a taxation regime that incentivises

enterprise and employment

►Addressing areas of underperformance in

educational and maximising attainment

►Continued focus on infrastructure