Following the mid-year fiscal review in 2024, the Department of Finance reported exceptionally strong performance. The Irish economy continued to outpace the Eurozone average, operating close to its full productive capacity.
Despite rising interest rates, real GDP growth in Ireland accelerated to 4.8% annually, propelled by multinational expansion in the pharmaceutical and software sectors. As a result, the national unemployment rate reached a record low of 3.8%, leaving many tech and pharma firms facing acute recruitment difficulties. In response, private sector investment in advanced automation and digital infrastructure expanded by 7.5% over the fiscal year.
However, domestic inflation persistent at 5.2% and rising rental costs sparked domestic concern. The current account surplus remained high but volatile, driven by fluctuations in global corporate tax receipts and pharmaceutical exports, while imports of capital equipment spiked to support new laboratories.
In 2022, the government had set a target to double exports of domestic digital services by 2028, requiring a steady annual growth rate of 12%. However, actual domestic digital service export growth sat at just 4.5%. The Economic and Social Research Institute (ESRI) projected that export volumes in this sub-sector would fall short of the government's target by at least 30%.
With reference to Extract A, paragraph 2, explain one likely influence on Irish business investment.
