Irish economy ranks as freest in euro zone

IRELAND IS the freest economy in the euro zone but it has slipped two places to ninth in the latest world ranking by right-wing think tank the Heritage Foundation.

The world’s freest economy, for the 18th year in a row, was Hong Kong. It scored 89.9 out of 100 on the foundation’s index, which looks at countries under four categories – rule of law, how efficient its regulations are, how small its government is and how open the markets are.

“The Irish economy has undergone sharp economic adjustments. After suffering a deep downturn, it has been on a path of gradual recovery,” the index said.

Ireland’s economic freedom score was 76.9, down 1.8 points from last year, when it was the seventh freest economy in the world. Ireland was then the second-freest economy in Europe after Switzerland.

This reflected poorer management of government spending and reduced monetary freedom, the foundation said. Ireland was just ahead of the US in the index. The least free was North Korea, in 179th place.

The index warned on how Ireland’s “ballooning cost of bailouts has prolonged uncertainty in the financial sector and turned a banking crisis into a sovereign debt crisis. The budget deficit has been on the rise, increasing the debt burden.

“Unlike other troubled euro zone economies, however, Ireland has a number of firmly intact institutional strengths,” it said.

“The foundations of economic freedom are buttressed by well-institutionalised protection of property rights and a stable judiciary. Regulatory efficiency and openness to global commerce support Ireland’s competitiveness.”

The index is based on the theory of economist Adam Smith's book The Wealth of Nations.

Ireland trailed Chile in seventh place and Mauritius in eighth. Singapore was second for the 18th year, followed by Australia, New Zealand and Switzerland. China ranked 138, down from 135.