Thursday 19 July 2018

Ireland up in global economic table - but Asia on the rise

China - aided by cities such as Hong Kong, pictured - is likely to overtake the United States as the world’s top economy in 2032
China - aided by cities such as Hong Kong, pictured - is likely to overtake the United States as the world’s top economy in 2032
Colm Kelpie

Colm Kelpie

Ireland has risen two places in a global economic ranking, but is expected to fall over the next decade as Asian economies leapfrog those in the west.

The index by the London-based think tank Centre for Economics and Business Research (Cebr) ranks Ireland 33rd in the world out of 192, up from 35th place last year. It is predicted to drop to 40th place by 2022 though, and 43rd by 2032.

India's Prime Minister Narendra Modi Photo: Graham Crouch/Bloomberg
India's Prime Minister Narendra Modi Photo: Graham Crouch/Bloomberg

It is part of a trend that sees Asian economies increasingly dominate the top 10 largest economies over the next 15 years.

Ireland is ranked 14th out of 37 countries in the European index of Cebr's World Economic League table.

Oliver Kolodseike, an economist with Cebr, said the Asian economies in particular are expected to move up the league table, driven by high population and economic growth.

"While the eurozone is growing quite strongly at 2pc, it's a lot weaker than China, India, Indonesia. They will perform very well over the next 15 years," he said.

"Most of the European countries will drop down. Italy is leaving the top 10 for the first time in quite a long time. They are all being overtaken by Asian countries."

Ireland has been achieving strong growth. Taoiseach Leo Varadkar said last week that the economy is expected to grow by more than 5pc this year, which is higher than previously expected.

The average over the coming years is expected to be around 3pc.

Cebr said Western Europe's share of world GDP falls to 13.8pc in 2032, roughly half its share in 2000.

The think tank is more upbeat about the prospect of Brexit than it was last year.

"Last year we were a bit too pessimistic about the impact of Brexit as was everyone else, so we're not that pessimistic anymore," Mr Kolodseike added.

The UK is forecast to drop from 6th place in 2017 to 7th in 2032 in the league table, overtaking France while being overtaken by India and Brazil.

Overall, India looks set to leapfrog Britain and France next year to become the world's fifth-largest economy.

Moody's Investors Service recently upgraded India's sovereign credit rating for the first time in nearly 14 years, in a boost for Prime Minister Narendra Modi's government.

China is likely to overtake the United States as the world's top economy in 2032, Cebr said.

Meanwhile, closer to home, the heads of the state's five main banks have proposed setting up a banking standards board designed to boost trust and confidence in the banking sector here.

The move has been backed by Finance Minister Paschal Donohoe.

He said the chief executives of the five main retail banks - Allied Irish Banks, Bank of Ireland, KBC, Permanent TSB and Ulster Bank - have informed the Department of Finance of their intention to set up an Irish Banking Standards Board.

The department said the initiative will be broadly modelled on the Banking Standards Board, which operates in the UK.

It is proposed that the board will be made up of experts from across civil society. The board will be chaired by an independent, non-banking individual.

The initial step will be the establishment of a panel to hire the chairman, CEO and board.

Mr Donohoe said the cost and time involved in establishing the new entity "should not be underestimated".

"In October I made it clear that the banks' behaviour in relation to tracker mortgages was disgraceful," Mr Donohoe said. "Following on from the recent publication of the Central Bank's update on the Tracker Mortgage Examination, I welcome this initiative by the current leaders of the banking industry and look forward to receiving more detail."

The body is expected to be up and running late this year, with costs borne by the banks.

Irish Independent

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