Unemployment remains high, the property market is still in deep gloom and there are vacant shops along almost every street. But the financial sector is picking itself up off the floor and last year Ireland came second only to Britain in attracting foreign investment from outside of Europe.
The number of foreign direct investment projects arriving last year rose 15 percent and they include the leaders of the new economy, with Facebook and LinkedIn joining long-standing high-tech investors like IBM and Intel, PayPal and eBay.
"We have to get the message out to the global market place that Ireland remains a very good place to do business," Gerard Kilcommins, who runs Medtronics in Ireland, said Friday in addressing the 50th anniversary celebration of the American Chamber of Commerce in Dublin.
A booming agriculture sector remains the core of the Irish recovery. Food is the country's biggest export with a surge in Chinese demand for Irish beef helping spur food exports by 11 percent to more than $10 billion last year. With a population of 4.5 million, Ireland produces enough to feed 36 million people and is aiming to increase production sufficiently to feed 50 million by the end of this decade.
Ireland is the world's leading producer of baby formula and 15 percent of the world's children drink products that are made in Ireland by Danone, Pfizer and Abbott. Within a year, that figure should rise to more than 20 percent when Danone's new $70 million plant in County Cork comes online.
There is an extraordinary contrast between the vigor of the real economy and the image of Ireland as one of the eurozone weaklings. This is because Ireland had an unusual crisis.
Unlike Greece, where sovereign debt was rising off the charts even before the financial crisis hit in 2008, Ireland had a relatively low level of sovereign debt but a very high level of private and banking debt, fueled by a dizzy boom in property prices and in the financial sector.
When the banks began teetering in the panicky autumn days of 2008, the Irish government boldly (but rashly) stabilized the situation by pledging to bail out the banks so that no depositor would suffer. That stopped the panic but left the Irish taxpayer on the hook for banking liabilities that will have its sovereign debt peaking at 120 percent of gross domestic product by 2013, the International Monetary Fund says. On top of that, personal debt is also more than 120 percent of GDP.
The Irish government is grimly determined to work and grow through this crisis and the national savings rate is up to a healthy 11 percent, three times what it was three years ago.
It is counting heavily on foreign investment, particularly from the United States, to continue the miracle it achieved in the 1990s. This is no false hope. With less than 0.1 percent of the world's population, Ireland has 5 percent of the globe's total foreign direct investment -- twice as much as France.
One result is that Ireland is one of the most industrialized countries in Europe. Industry accounted for 31 percent of GDP in 2009, the World Bank says, more than in Germany, where manufacturing industry accounted for only 26.5 percent. U.S. business in Ireland is crucial to this strength, accounting for more than 70 percent of all research and development in Ireland, and fueling its high-tech and pharmaceutical industries.
The U.S. Commerce Department reckons that Ireland is the most profitable place in the world for U.S. investments, with American companies booking more than $100 billion in profits in Ireland in 2008, more than they booked in Japan and china combined.
Even more striking, the Commerce Department figures say that profit per employee for U.S. companies in Ireland was $880,000 a year, compared to $109,000 per employee for Europe as a whole.
One big reason for this, of course, was Ireland's famously low 12.5 percent corporation tax, which makes it useful for international corporations to organize their business in a way that fuels profits to low-tax Ireland. But this has become a political hot potato, with French and German officials demanding that Ireland level this particular playing field in return for the $122 billion bailout agreed by the IMF and the eurozone last November. But the Irish are in no mood to compromise.
"If you invest in Ireland, you will have certainty that will be a 12.5 percent tax rate an you can plan on the basis if that," insists Enterprise Minister Richard Bruton.
Enterprise Ireland Chief Executive Officer Frank Ryan claims the economy is seeing "a strong rebound" in key sectors like the food business, life sciences, electronics, engineering, software and consumer retail. Employment in the export sector is rising again.
"That has not happened since the start of the recession. We are coming out of the trough," Ryan says. "Ireland can be the comeback economy of Europe. When I say this, I mean it. It is evidence based. It is not based on a wish."