Increase of 1pc in US growth boosts Irish economy by 1.3pc
THE Irish economy is so dependent on the American economy that a 1pc increase in growth in the United States boosts our gross domestic product by 1.3pc, the Central Bank said in a research paper.
This boost reflects the fact that the Irish economy is dependent on exports to the US for much of its growth, researchers Colin Bermingham and Thomas Conefrey conclude after conducting computer simulations.
"Our results show that the Irish economy is highly sensitive to changes in external demand," they write.
An expanding US economy boosts economic growth here which then pushes down unemployment and pushes up wages, the researchers add.
The researchers note that exports account for almost 200pc of Irish GDP which is twice the proportion of countries such as Britain and Germany. Around a fifth of our exports go to the US and that country has investments in Ireland worth $122bn.
US companies have around 550 affiliates based here which employ 91,000 people, or 5pc of the workforce.
The Irish economy's growth is also dependent on countries such as Britain and the eurozone in proportion to the quantity of goods exported to those places, the researchers add.