Irish economy to remain top of growth tables

Ireland will remain the fastest growing economy in the developed world over the next 15 years, according to a leading global bank.

In a major study into the long term growth prospects of the world economy Deutsche Bank named Ireland, the US and Spain as the OECD economies expected to grow most quickly in the period from 2006 to 2020.

The bank lists population growth, investment, human capital and trade openness as the key drivers for growth from now until 2020. In addition, the bank considers a consistent growth record as an attraction for investors.

Demographic trends will help Ireland and the US, while per capita GDP growth will be especially strong in Spain where investment in education will reap dividends. India, Malaysia and China will post the highest overall growth rates over 2006-20 according to the bank.

A relatively young population will mean Ireland has more time to address the problem of an ageing workforce which is looming over other industrial nations. The resulting increase in healthcare spending should also benefit many Irish-based companies.

"The new investment opportunities in the healthcare sector will establish a broader basis for growth in Ireland. Together with the highest expected population growth of the OECD countries of 1 per cent this allows GDP growth overall of nearly 4 per cent per annum - remaining the highest of any OECD country," according to the report,  Global Growth Centres 2020.

Deutsche Bank described Ireland as the "runaway star" of the 1990s among the industrial countries, posting 7 per cent GDP growth per year. "Even though a considerable proportion of the income generated in Ireland is paid to foreigners, the income of the Irish has increased substantially," the report states.

The bank commends Ireland for its policy of offering tax incentives to foreign firms which have generated export-led growth. "The opening of the economy has been decisive: from being one of the most closed economies in the mid-1970s, Ireland had become one of the most open in the world by 2002."

The bank assessed 34 countries as part of its Formel-G forecasting model which modern growth theory, econometrics and trend analysis. The emerging star in the global economy is India, with an expected annual average rate of GDP growth of 5.5 per cent over the years 2006 to 2020.

With a growth rate of 5.5 per cent, real GDP doubles every 13 years. As a result, India will - in purchasing power parity (PPP) terms - take the place of Japan as the world's third-largest economy behind the US and China by the end of this decade, according to Deutsche Bank.

However despite this breakneck growth rate, per capita income in India will still have some way to go before reaching western living standards. Compared to Germany, India's per capita income will rise from 10 per cent today to 16 per cent by then.