The recent recovery in the Irish economy has been led by internal dynamics rather than the global economy or foreign direct investment, according to economist Mr Robbie Kelleher of Davy Stockbrokers
In a market comment yesterday, Mr Kelleher said the internal dynamics of the economy, which come from the age and structure of the population, has been understated.
He said the contribution from the overseas sector and foreign direct investment had been overstated. A substantial part of the benefits of Irish exports accrue to companies outside Ireland.
Also labour market statistics show that fewer than 150,000 people are employed by the overseas sector. This equals about 8 per cent of total employment and compares unfavourably with the construction sector, where employment is 50 per cent higher, and the wholesale and retail trade, where employment is 70 per cent higher.
The performance of exports in recent times has been disappointing, he said. Exports declined by 3.2 per cent in the first quarter of 2004 compared to the same quarter in 2003, and reports indicate they will be down in the second quarter also.
The growing population provides "a powerful source of increased demand across a whole range of domestic sectors".
Ireland, with a population growth rate of 1.6 per cent, has "comfortably the most rapidly expanding population in Europe, where the average growth rate is just 0.3 per cent per annum".
The new entrants to the EU will not affect the overall population scene in the union.
The population growth is evenly spread between natural increase and immigration, Mr Kelleher said. The number of women of child-bearing age remains high. The trend will change in the latter part of this decade "but for the next couple of years, the internal dynamics continue to look very favourable".
