08 Jul 2020 | 12.06 pm
IDA Ireland Sounds FDI Alarm Bell
Covid-19's impact on FDI flows will be severe
08 Jul 2020 | 12.06 pm
With global investment likely to fall by as much as 40% this year and next due to Covid-19, IDA Ireland expects downward pressure on job creation and a more difficult climate for inward investment.
However, the state agency reports continued investment in the first half of 2020 despite the serious disruption caused by the global pandemic. A total of 132 new investments were made, 53 new investors and 44 expansions by existing companies, with “associated employment potential” of 9,600 jobs.
The figure of 132 new investments is 6% down on last year’s first half total of 140, perhaps prefiguring what is to come.
Agency chief executive Martin Shanahan said: “In the context of the pandemic, it is encouraging that Ireland has been able to secure a significant number of investments in the first six months. These were won against a backdrop of our global business being impacted from January in Asia, and increased upheaval across all major source markets as the first half of the year unfolded.
“The figures demonstrate both the strength of our value proposition and the resilience of the FDI sector. That said, there is absolutely no room for complacency, the global economic climate within which we are now all operating remains extremely challenging, with international forecasting bodies predicting significant impacts of the Covid-19 pandemic on global growth, trade and on FDI flows.
“UNCTAD estimates that the impact on FDI flows in 2020 and 2021 will be severe, potentially cutting global investment by up to 40%. While it is too early to say what the ultimate effect of that will be on the out-turn for this year and next, it will undoubtedly exert downward pressure on job creation and increase job losses.”
Shanahan stressed also that competition for FDI is increasing as countries increase their focus on self-sufficiency and security, especially in key sectors for Ireland such as pharmaceuticals and medical technologies.
“Ireland’s value proposition for inward investment is based on offering a safe and stable investment location with access to the EU market, an educated and skilled workforce, an attractive environment where people want to live and work, a competitive, consistent and transparent corporate tax regime and an excellent return on investment.
“It is critical that investment in productive assets that enhance our competitiveness continues. IDA would endorse the recent analysis from the National Competitiveness Council that highlights the need to focus on productivity enhancing areas including infrastructure investment, digital enablement and skills and training.
“It is plain to see that targeted investment in skills and training will be a key priority for all sectors of the economy, including FDI, in the coming years given the probable legacy of challenges arising from the pandemic.”
Photo: IDA Ireland chairman Frank Ryan (left), CEO Martin Shanahan (centre) and enterprise minister Leo Varadkar (Pix: Chris Bellew/Fennell Photography)