12th December 2022
Outlook
Positive pipeline for H1 2023 but outlook more uncertain for second half of next year
“Sustaining Ireland’s FDI performance in this climate of significant uncertainty, with persistent risks, requires a renewed focus on capacity constraints and competitiveness challenges” – IDA Interim CEO
IDA Ireland, the inward investment promotion and development agency of the Irish Government, today reported strong annual results for 2022 with a substantial increase in growth in FDI employment on 2021.
Total employment in IDA client companies in Ireland now stands at 301,4751, a 9% increase on 2021. 103 of the 242 investments won in 2022 were new name investments.
Job losses remained at historically low levels with 8,407 recorded in the past year giving a net jobs total of 24,019 for 2022.
Total employment in IDA client companies in core sectors grew in 2022, up 9% to 116,192 in Information and Communications Services, up 8% 105,199 in modern manufacturing, 5.6% in traditional manufacturing to 23,658 and up 9% to 56,426 in business, financial and other services.
The strong growth in regions continued this year with 127 - or 52% of the investments won going to regional locations and employment growth recorded in every region of the country. Employment growth was highest in the Mid East region; up 13.1% to 21,861. The Midlands Region was up 10.5% to 7,665, Dublin was also up 10.5% to 137,822, the Border up 6.3% to 8,885, the South West was up 7.5% to 52,228, the West region was up 7.3% to 31,490 the Mid West recorded a growth increase of 3.6% to 26,004 and there was growth of 3% in the South East, to 15,520.
With sustainability one of five pillars of our strategy, IDA’s strong focus was evident in the number of sustainability project approvals in 2022 with 21 investments secured, the majority of them focused on climate change mitigation. A focus on transformation is more important than ever if companies are to remain competitive amid an accelerating shift towards a low carbon and high-tech economy. The resilience and longevity of MNCs in Ireland reflects their ability to constantly transform in response to change. IDA is engaging with clients on RD&I, training, digitisation and sustainability related investments to ensure the FDI base is positioned for continued success in the future.
The 2022 figures continue the pattern of sustained, robust growth in FDI investment and FDI-related employment that has been achieved over a continuous period of more than ten years. However, at the announcement of our mid-year results in July, we pointed to serious global challenges and uncertainties. It is now evident that the global economy faces serious headwinds in 2023 with the continuing Russia-Ukraine war, inflation, monetary policy and geo-political developments.
IDA continues to monitor the situation in the global technology sector and continues to actively engage with its technology client base. The layoffs announced in recent weeks are regrettable and our thoughts are with those who have lost, or are in the process of, losing their jobs. The companies that have announced job losses in recent days will continue to operate in Ireland and are important companies in the global and Irish ecosystem. IDA’s focus is on the continued partnership with these companies to continue to grow their presence in Ireland and deepen their impact on the Irish economy. The technology base in Ireland has been building for over 60 years and will continue to grow in the future, despite current challenges. The underlying strength in the technology sector is driven by a number of factors, including the pace of digitalisation (across all sectors) and the associated need for new digital infrastructure and services.
An Tánaiste and Minister for Enterprise, Trade and Employment Leo VaradkarTD said:
“Ireland has not been immune to the challenges created by global events of recent months, and we expect those to continue into 2023. However, these figures show that Ireland continues to be seen as a location of choice for new investors and long-established companies who chose to reinvest in substantial expansions of their operations here.
These are the best ever FDI employment figures in a single year – 24,019 net new jobs represent a 43% increase on 2021, which itself was a record year. The numbers directly employed in the multinational sector have also surpassed the 300,000 mark for the first time.
It is extremely positive to see the growth in investment outside of Dublin continue in 2022, with a good nationwide spread achieved.
I know it’s a difficult time for people working in Tech companies as we enter the Christmas and New Year period. My office is in close contact with the companies involved and we are working with them to minimise the impact on people’s livelihoods and the wider economy.
While I am concerned about the job losses in Tech, there is a good pipeline of new investments coming from the multinationals and Irish-owned corporations in a range of sectors including Life Sciences, Food and Beverages, Manufacturing and Aviation. We expect many positive announcements in the coming months. The economy is well diversified. Ireland continues to maintain a reputation as an excellent location for investment.
Last week I launched a new White Paper on Enterprise which sets out the Government’s enterprise policies in the period to 2030. Foreign Direct Investment will remain central to our economic model. The White Paper seeks to advance Ireland’s FDI and trade value proposition and includes the targets of a 20% increase in IDA client expenditure in Ireland by 2024; and at least half of all FDI investments between 2021 and 2024 to be located outside of Dublin.”
Mary Buckley, Interim CEO IDA Ireland said:
“The challenging and volatile international environment that we saw in 2021 escalated this year. In light of that, these annual results are most encouraging and show that investors’ commitment to Ireland remains strong and Ireland’s value proposition as a place to do business remains a compelling one. That said, the now evident severe headwinds facing the global economy in 2023 means we will have to work harder than ever in the year ahead to win new investment. Our FDI base of companies is also subject to these headwinds. IDA will remain close to our clients at this time of uncertainty and support them as companies review their global cost base to remain competitive. A focus on transformation is more important than ever if companies are to remain competitive amid an accelerating shift towards a low carbon and high-tech economy. The resilience and longevity of MNCs in Ireland reflects their ability to constantly transform in response to change. IDA is engaging with clients on RD&I, training, digitisation and sustainability related investments to ensure the FDI base is positioned for continued success in the future.
In the face of such uncertainty, we are likely to see companies adopt a cautious approach, so slower growth is likely in 2023 with less clarity in H2 of next year.
We continue to see opportunities across and within our sectors of focus, which we believe remain well aligned to the global economy of today and well positioned to succeed in the transformed economy of the future. At the same time, we will continue to seek out and exploit opportunities in new and emerging growth areas in an evolving investment landscape.”
The forthcoming ABSEI2 survey will show that expenditure within the economy by FDI companies increased during 2021 despite the prevailing challenging conditions. Payroll was up 9.8% to €19.6bn, Irish services and materials spend increased by 10% to €11.1bn and capital expenditure was up 8% to €9.2bn. Exports of €315.5bn represented an increase of 8.7% year on year. This resilience and growth from FDI has been an important contributor to our economy and the national finances.
The altered political and economic landscape and its immediate future implications for FDI is a key focus of IDA’s current mid-term review of its strategy (Driving Recovery and Sustainable Growth – 2021-2024). The review is considering FDI implications arising from the global trends including the rise of industrial policy, open strategic autonomy, global tax reform, the future of work, the sustainability imperative and the increased prominence of geopolitics as a factor in the economic outlook. “Considering the many changes we have seen over the last few years and the changes facing us in the years ahead, it is an opportune time for us to set a renewed medium-term vision for our strategy” the Interim CEO said. IDA also proactively engaged with Department of Enterprise, Trade and Employment on the newly launched White Paper on Enterprise as IDA’s strategic objectives are strongly aligned on the two dominant trends of the 21st century, decarbonisation and technological change.
Mary Buckley:
“We have experienced much change in recent years from the national recession from 2008 to the global pandemic, and considerable global economic and political upheaval. Responding proactively to change has been the hallmark of Ireland and IDA’s success and we will continue to be agile, resourceful and committed in our aim to continue to attract FDI to Ireland.
To remain successful in the years ahead we need to accelerate the carrying capacity of the economy with regard to housing, energy, water, planning, infrastructure and also with talent policies. Continued action at speed and scale to address these issues is essential if we are to successfully move to an internationally competitive low carbon, high tech economy.
Client companies remain positive about the business environment in Ireland and our attractiveness relative to key competitor locations for FDI. This is borne out by a good pipeline of investments for H1 2023. Ireland’s strengths continue to include our skilled and diverse talent base, high quality education and training ecosystem, stable and consistent policymaking, and competitive corporate tax regime.”
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