Ireland will have to work harder to retain a healthy flow of foreign direct investment (FDI) as political and trade concerns impact on business activity globally, the chief executive of IDA Ireland has warned.
Speaking to reporters at the World Economic Forum in Davos, Martin Shanahan said the atmosphere at this year's gathering of more than 3,000 delegates, including political and business leaders, was "more subdued" and "cautious" than in recent times.
“There is a possibility that FDI globally will decline this year, and if that is the case we are going to have to work harder to maintain the level of investment that we’re currently getting into Ireland,” Mr Shanahan said.
On Monday, the International Monetary Fund trimmed its global growth forecast for this year and next, amid concerns about the trade war between the US and China and the impact of Brexit.
Meanwhile, 30 per cent of 1,300 chief executives surveyed by PwC believe global economic growth will decline over the next 12 months. That is six times the level of a year ago and the highest percentage since 2012.
The IDA said earlier this month that its multinational clients added a net 14,040 jobs in the nine months to the end of September, bringing total employment by companies backed by the agency to an all-time high of 229,057.
Brexit has prompted 55 companies, led by financial firms, to approve investments in Ireland, with more than 4,500 associated jobs, according to the IDA.
However, large-scale repatriations of profits by US multinationals from the Republic last year, on foot of tax reforms by Washington DC, mean that the total value of FDI declined last year, according to the United Nations Conference on Trade and Development.
Meanwhile, competition for underlying FDI is increasing, according to Mr Shanahan.
“We have countries, large and small, vying for the exact same investment that we are vying for. We are witnessing that here in Davos too, where there will be a lot of investment promotion agencies similar to the IDA vying for the attention of the people who are gathered here.”
Prospective client companies
Mr Shanahan and his team was set to hold about 25 meetings with existing and prospective client companies this week at Davos, with some attended by either Taoiseach Leo Varadkar or Minister for Finance Paschal Donohoe, who are travelling to Switzerland on Wednesday evening.
The IDA’s Brexit campaign is two-fold, according to Mr Shanahan. A campaign to attract companies with a footprint in the UK that will need continued EU presence after Brexit is “probably nearing completion”. However, the IDA continues to actively court multinationals seeking overseas expansion that would traditionally have leaned towards investing in the UK.
Mr Shanahan rejected suggestions that the IDA was seeking to “steal” business from the UK. “I don’t think we’re stealing anything. We’re in the market for mobile investment, and if multinationals decide they need a footprint in the remaining 27 [EU countries] we are in the business of making sure that Ireland benefits from that.
“We make no apologies for the fact that we’re pitching for what is mobile investment. At the moment, given global uncertainty, stability is at a premium, so part of our message is clearly that Ireland is stable.”
