Falling world stock markets, a declining US dollar and growing international competition pose challenges to Ireland's continued economic growth, Mr Martin Cronin, chief executive of Forfás, warned today.
Speaking at the publication of the Forfás annual report for 2001, Mr Cronin said that these challenges were being amplified by the recent surge in prices and pay in the Irish economy.
"Ireland as a nation and an economy has made giant strides over the last decade and our economy is still performing strongly, with record numbers of people at work," he said.
". . .However, to remain successful. . . [we must] achieve slower pay and prices growth so that the economy can remain robust and competitive and maintain the progress made in recent years.
Looking at the global economy, Mr Cronin said that the state of the US economy is a key factor for Ireland. It accounts for about 30 per cent of world output and US companies account for 78 per cent of Irish exports (in 2000).
In addition, the US is the key provider of Foreign Direct Investment (FDI) to the Irish economy.
"What we are seeing in the recent stock market falls and the declining US dollar is the increasing realisation that the problems in the US may have a negative impact on the global economy, he added.
"This has clear implications for our own open economy where exports equates to 80.2 per cent of GDP, making it one of the most open economies in the world and highly reliant on international trade.
According to the report, two key elements in the economy need to be urgently addressed.
The first was a curb in price inflation in tandem with wage restraint. Continued rapid increases will undermine both exports and imports which, he said, were the pillars of our current prosperity.
The second was to ensure that the number of second level students opting to take science and engineering courses remains adequate.
"The number of students applying for computer engineering degree courses has fallen by 37 per cent this year, while those applying for degree courses in telecommunications engineering is down by 35 per cent," he said.
". . . If the collapse in applications for these types of courses were to continue unchecked, we would face a major gap in the supply and demand for computer and engineering graduates in a few years time. . ."