Ireland is the 3rd most competitive country in the euro area and the 11th most competitive economy in the world, an improvement from 13th position last year, according to the latest IMD World Competitiveness Rankings.
The index of 63 countries, compiled by the IMD business school in Lausanne, Switzerland, is acknowledged as one of the most reputable measures of global competitiveness.
The 2022 edition of the report said Ireland’s improved fiscal position, ability to attract investment, and strong recovery of the labour market have contributed to the rise in international competitiveness.
This improvement is reflected in a range of metrics, notably economic growth and increased employment.
However, the report noted that noted Ireland’s poor performance in technological infrastructure indicators remained a concern in the context of the growing importance of the digital economy and also of remote working.
Ireland has improved its ranking from 2021 in two out of the four core pillars of competitiveness assessed by the IMD: Economic Performance, 7th (up from 22nd), Government Efficiency, 11th (up from 13th), while the Business Efficiency pillar remained unchanged at 11th. Ireland’s ranking in the Infrastructure pillar deteriorated from 20th in 2021 to 23rd in 2022.
This year’s report also highlighted the presence of global pressures impacting prices, with consumer price inflation listed as the biggest contributing factor to the deterioration of the overall performance of Ireland’s economy. Other challenges facing the Irish economy included capacity constraints in housing, other infrastructure, and the construction sector, as well as the availability of talent to meet critical skills gaps.
As the most digitally advanced country in the world, Denmark claimed the top spot globally for the first time, pushing Switzerland down to 2nd place. Singapore, Sweden and Hong Kong follow in 3rd, 4th and 5th position respectively.
According to IMD, this year’s results reflect the negative effects of inflationary pressures on businesses and thus on economic competitiveness.
Besides inflationary pressures, other global challenges include Covid-19 variants, differing national pandemic policies and the invasion of Ukraine by Russia, said World Competitiveness Center chief economist Christos Cabolis.
The National Competitiveness and Productivity Council (NCPC) welcomed Ireland’s result but cautioned against complacency.
“We should be pleased with the findings of the IMD’s Competitiveness Yearbook which showcases our improving competitiveness in an international context,” said chair of the NCPC Frances Ruane said.
“However, we cannot be complacent and staying competitive must remain a constant focus for Government and enterprises alike. Urgently improving the key foundations of Ireland’s competitiveness performance is a vital response to the challenges presented by current challenges such as cost pressures, trade disruption, supply chain issues and infrastructural deficits. Improving competitiveness and increasing productivity are essential to ensuring businesses in Ireland can compete successfully in international markets and protect the resilience of the Irish economy throughout the economic cycle,” she said.
