Ireland has experienced a remarkable economic rebound over the past two years. Ireland was among the European countries most severely affected by the economic crisis when the real estate bubble burst in 2008 and domestic banks required government support. Output contracted by almost 8 % between 2007 and 2009. A wide-ranging and ambitious series of reforms was started in late 2010 with the support of the EU-IMF programme of financial assistance. The strong ownership of the reforms by the Irish authorities and their successful implementation laid the ground for the ongoing recovery. They helped turn Ireland into the fastest growing economy in the European Union in 2014 and 2015. The reforms under the EU-IMF programme focused principally on financial sector repair and restoring fiscal sustainability, but also included a structural and competitiveness component.
Ireland is experiencing macroeconomic imbalances. Large stocks of net external liabilities and of public and private debt constitute vulnerabilities, despite improvements. Net external liabilities are on a sharp declining trend, in light of a large current account surplus and competitiveness gains. Public debt and private debt are on a downward trajectory, on the back of favourable growth conditions. Banks are well recapitalised and bank profitability is improving. Non-performing loans are declining from high levels. Despite a strong rebound in property prices in 2014, there is no clear evidence of overvaluation. Nevertheless, the economy remains exposed to potentially significant cyclical swings and external shocks. A broad set of policy measures have been taken, notably during the financial assistance programme, to address key challenges in terms of banking sector repair, insolvency frameworks, the housing market and fiscal sustainability.
Read a complete analysis of Ireland's economy in the country report 2016 [2 MB]
2015 recommendations in brief
The Commission has made four country-specific recommendations to Ireland to help it improve its economic performance. These are in the areas of: public finances and taxation; health; labour market and poverty; financial sector.