Covid-19: IDA expects 40% drop in FDI

Martin Shanahan says ‘no room for complacency’

Covid-19 is likely to hit the multinational investment that has created almost 250,000 jobs in the Republic, State agency IDA Ireland warned on Wednesday.

The IDA, responsible for attracting multinationals to the Republic, said 132 overseas companies likely to create up to 9,600 jobs had pledged to set up operations here so far in 2020.

However, Martin Shanahan, IDA chief executive, pointed out that UN and Organisation for Economic Co-operation and Development (OECD) forecasts indicated that foreign direct investment could fall by 40 per cent this year and in 2021.

“There is absolutely no room for complacency,” he warned. “The global economic climate within which we are now all operating remains extremely challenging, with international forecasting bodies predicting significant impacts of the Covid-19 pandemic on global growth, trade and on foreign direct investment flows.”

Speaking after the agency published its 2020 mid-year review and 2019 annual report, Mr Shanahan said Covid-19 would probably leave the Republic facing tougher competition to lure a smaller number of multinationals here. “We will have to be ready to fight for that investment,” he said.

He added that the Republic’s solid performance in attracting investment over the past five years had put the State in a strong position.

Mr Shanahan singled out the pharmaceutical and medical technology industries, which have built a strong presence in the State, and noted that the pandemic would result in these businesses stepping up activity.

IDA offices in the US, the Republic’s biggest overseas investor, responsible for 175,000 multinational jobs, remained closed while many regions there continue to struggle with the virus.

The organisation's European offices are likely to open shortly while those in China, Japan and Korea have reopened.

More than 400,000 jobs depend directly and indirectly on the overseas multinationals that have set up shop in the Republic, according to IDA calculations, which Mr Shanahan described as conservative.

Going into 2020, IDA client companies employed more than 245,000 people, a record for multinationals and ahead of Government targets set for the agency.

IDA Ireland estimates that each direct job in these businesses creates about one other indirectly in companies that supply and service multinationals.

New and existing IDA client companies created 22,500 new jobs every year for the past five, according to agency figures.

Taking losses into account, this resulted in 13,500 net new posts annually over the last half-decade. About half of these jobs were outside Dublin, Mr Shanahan noted.

“We can’t say with any certainty what the outcome will be this year. My expectation is that there will be fewer jobs created within our portfolio this year,” he said.

Confirmed investments

Investments confirmed so far this year include credit card company Mastercard, which announced in February that it would employ up to 1,500 at a new technology centre in Dublin.

US company Doterra, which makes oils for food supplements and beauty products, pledged to create 100 jobs in Cork. South African animation specialist Triggerfish intends to hire up to 60 people at a new base in Galway.

Mr Shanahan said this showed that a recent decision to open an office in South Africa was already paying dividends.

Leo Varadkar, Tánaiste and Minister for Enterprise, Trade and Employment, said IDA client companies had shown "real resilience" in responding to the pandemic.

Medtronic in Galway increased the production of ventilators to meet global demand from 200 a week at the end of February to more than 1,000 by the end of last month.

Mallinckrodt Pharma and microchip maker Intel donated protective equipment to frontline healthcare workers, he added.

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas