Competitiveness Council sees echoes of Celtic Tiger bust in waning economic energy
The NCPC says the slide is a sign of a loss of competitiveness in the Irish economy that echoes trends seen at the start of the 2000s.
While Ireland retains a highly competitive position globally, the NCPC says the trend is concerning.
"It is clear, however, that our ranking is trending downwards. More importantly, there is no reason to expect a significant, near-term improvement in many of the factors that are currently weighing on our competitiveness (ie basic infrastructure, the cost of living, indigenous energy production, listed domestic companies, etc.),' the NCPC warns.
It says that headline economic metrics such as tax receipts and the numbers at work remain strong, but there are other signs of a potential softening in the economy.
"The current downward trajectory in Ireland's international competitiveness is one such sign, but this is not occurring in isolation. Rather, this is happening in tandem with an ongoing rise in the incidence of insolvencies and a slowdown in the rate of FDI projects being won by Ireland. Indeed, the Celtic Tiger era may prove to be instructive in this regard, albeit we cannot know from this remove,' the bulletin warns.
Ireland attained a global competitiveness ranking of 5th in 2000, the NCPC says, but almost immediately a period of extended deterioration set in. By 2004, Ireland had fallen to 10th and by 2011 it was ranked just 24th out of 69 countries surveyed, after a fall was recorded in five out of seven years.
The International Institute for Management Development's (IMD) World Competitiveness Centre has been publishing its rankings of the competitiveness of countries for 37 years. It now assesses 69 economies based on their ability to create and maintain a competitive business environment, taking in more than 262 indicators grouped across four pillars: Economic Performance, Government Efficiency, Business Efficiency, and Infrastructure.
Its competitive metrics are based on a mixture of quantitative and qualitative data. In this year's rankings, Switzerland reclaimed the top spot, moving up one place to overtake Singapore. Both are high-cost economies with strong quality of life outcomes.
Ireland remains one of the most competitive economies in the EU and has been placed in the Top 20 most competitive economies globally since 2012.
The NCPC says competitive traits which Ireland has developed – including its skilled workforce, business-friendly environment and strong institutions – continue to be strengths. However major weaknesses now include the quality of infrastructure – where we place just 44 out of 69 countries assessed.
The NCPC, chaired by Prof Frances Ruane, says the upcoming Action Plan of Competitiveness and Productivity will seek to address these weakness while continuing to maintain our strengths.
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