Ireland still popular for FDI as investors set to increase global spend

Ireland remains one of the most attractive locations for foreign direct investment globally, according to a new study which finds 79 per cent of investors are intending to increase their FDI in the next three years.

The 2018 Foreign Direct Investment (FDI) Confidence Index from consulting firm A T Kearney ranks Ireland in 19th place overall, up one place versus 2017 and compared to 23rd spot two years earlier.

The report says investor interest in Ireland has remained robust even as FDI inflows have been irregular over the past few years.

“Flows skyrocketed to $188 billion in 2015, plunged to $22 billion in 2016, and recovered to $66 billion in 2017,” it says.

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“Overall, however, the economic outlook is bright for Ireland. GDP growth in 2018 is projected to be 3.5 per cent - dramatically higher than the 1.9 per cent growth expected in the euro zone.”

The report authors say strong investment is unsurprising given that Ireland offers many corporate advantages, including a competitive cost base, a young and educated workforce, low tax regime, membership in the euro zone, and a launch pad to the rest of Europe.

It adds the State could also greatly benefit from Brexit in the coming years.

Europe remains particularly attractive to foreign investors, capturing 14 of the 25 spots on the index, however, the US stays in first place for the sixth year in succession. It is followed by Canada, which jumps three spaces, Germany, the UK and China. Rounding out the top ten are Japan, France, Australia, Switzerland and Italy.

"Europe's strong showing in this year's Index is a sign that 10 years after the onset of the global financial crisis - the European economy has finally turned the corner and is poised for greater growth," says Erik Peterson, co-author of the study.

According to A T Kearney, there was a a four percentage point increase in the number of investors looking to increase their FDI this year. The increase comes as investors signal greater confidence in the global economy with 66 per cent more optimistic about the economic outlook than they were this 12 months earlier.

Despite such optimism, the firm finds that investors are also increasingly bracing themselves for economic disruption by adopting strategies to mitigate the effects of protectionism on their business operations.

“Investors appear to have recognised that the heady days of globalisation are no more,” says Paul A Laudicina, chairman of A T Kearney’s global business policy council.

“In an increasingly islandised world, global companies recognise that it is important to build local connections to ensure continued market access,” he added.