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Speech

Opening remarks by Minister Donohoe at the launch of the 2025 OECD Economic Survey of Ireland


Introduction

"Good afternoon everyone.

"I am delighted to be here with you all today for the launch of the OECD’s biennial Economic Survey of Ireland.

"I am very pleased to welcome Álvaro Pereira, Chief Economist at the OECD, and his colleagues to Dublin for today’s event. I also wish to extend my thanks to the team at the IIEA for hosting us and to Frances Ruane for chairing the proceedings.

Ireland’s relationship with the OECD

"Before turning to the Report itself, let me briefly take a step backwards and say a few words about Ireland’s long-standing relationship with the OECD.

"Our connection with the organisation dates back to 1961, when we were among the founding members. In the subsequent decades, the OECD has provided an invaluable platform for cross-country sharing of best practice and in facilitating international collaboration on shared challenges.

"From an Irish perspective, we have benefitted enormously from the evidenced-based research and the expert analysis; and I think it is fair to say that this has been a two-way street, with economic developments and policies in Ireland over the years – both positive and negative – being useful ‘case studies’ for others to learn from.

2025 survey

"Let me now turn to the Survey itself, which continues the long tradition of high quality, objective analysis. I’m certain that anyone reading the document will see that it provides a rich, comprehensive and balanced assessment of the Irish economy, highlighting both strengths and weaknesses. For those who are unfamiliar with the Survey, I like to think of it as an external, peer-review of our economic performance and prospects, one that highlights what we can do better and, also, what others can learn from us.

"The real added value, in my view, is to be found in the so-called ‘structural’ chapters, where key medium-term challenges are identified and recommendations made, building on the insights of economics but, more importantly, the practical experience of other countries.

"Before turning to these issues let me just say a few words about near-term economic developments, where my assessment is broadly aligned with that of Álvaro and his colleagues.

Macroeconomic developments and challenges

"As the Survey acknowledges, the Irish economy is in a relatively healthy position at the moment, having largely absorbed a multitude of economic shocks in recent years.

"Inflation eased significantly over the course of last year, and Ireland ended the year with the lowest rate of inflation in the euro area. I am conscious, however, that while the rate of increase has slowed, the price level remains high.

"I am especially encouraged by developments in the labour market, which has been extraordinarily resilient in the face of back-to-back shocks since the turn of the decade.

"There are now 2.8 million people in employment – equivalent to three-quarters of the working age population; this metric – the so-called employment ratio – has never been higher and is a key factor behind the continuing improvements in our nation’s living standards. The unemployment rate is now just 4.0 per cent, its lowest level in more than two decades.

"I think it is also important to point out that the share of women participating in the labour market is also at its highest level ever. Notwithstanding an increase in recent months, the youth unemployment rate at 11 per cent on average last year also remains relatively low and well below the EU average of 15 per cent.

"Having said all that, it is beyond doubt that this Survey is prepared against a backdrop of increasing global fragmentation and heightened global uncertainty.

"It is clear that the global economic landscape is changing: tectonic shifts in the global economic order are underway and the ‘new normal’ will almost certainly be very different from what we have been used to over the last three or four decades.

"From an Irish perspective, our economy has benefitted enormously from global economic integration and from the ‘peace dividend’ that flowed from the stable, rules-based international order.

"Unfortunately, the global economy is now fragmenting along geopolitical lines and the gains from cross-border trade and investment liberalisation are now at risk. As a major beneficiary from these positive dynamics, the Irish economy is exposed to the reversals currently underway.

"From a government perspective, this raises the question as to how to ensure we are have the right policy response. The objective must be to “control the ‘control-ables’”, that is to focus on what we can control and influence.

"In this vein, we must strive to ensure that Ireland remains a competitive economy in which to do business, including by addressing the major infrastructural bottlenecks in key strategic areas – energy, water, housing and transport – that are holding back economic progress.

"The Survey is really useful in highlighting this policy priority and offering recommendations as to how to proceed. Human capital – the skills and quality of the workforce – is also highlighted as key to investing in the future and maintaining our competitiveness.

"Importantly, the Survey devotes a chapter to some of the key issues associated with climate change. We have seen positive developments in our response to climate change. Ireland’s greenhouse gas emissions decreased by 6.8 per cent in 2023 with reductions in almost all sectors. This is the lowest that greenhouse gas emissions have been in three decades, and below the 1990 baseline.

"Despite this progress, the Survey identifies the continuing challenge in meeting our interim obligations of reducing carbon emissions by 51 per cent by 2030 (v 2018 levels). However, importantly, the analysis shows how we can get on track to deliver on this target.

"Importantly, the Survey goes beyond mitigation and documents several issues associated with climate change adaptation – an issue that really resonates with us all in Ireland right now given the recent disruption in parts of our country from the recent Storm Éowyn.

"The Survey also highlights the key vulnerabilities in our public finances, including the large future costs associated with population ageing. We are conscious of these future spending pressures: this is why Government is diverting some of our current budgetary surpluses to the Future Ireland Fund and the Infrastructure, Climate and Nature Fund.

"Finally, the Survey devotes a chapter to the issue of housing; addressing the imbalance in this market remains one of the most important challenges for the government.

"I was especially pleased to see the OECD explicitly link the issue of housing to our national competitiveness. The economic success our country has enjoyed over recent years has been dependent on our ability to produce, retain and attract well-educated people and the availability of housing is critical to that endeavour.

"In a more uncertain world, Ireland will have to compete harder to retain its position as an attractive place to invest. Accordingly, the availability of affordable, appropriate and quality housing will be key to our future growth prospects. The OECD has rightly made this connection.

Summary

"To conclude, let me highlight my key takeaway from the economic analysis that has been underway over the past year and which has culminated in today’s Survey.

"For me: it is the need to prepare.

"Our economy is in good shape and this gives us the resources and the bandwidth to address many issues.

"But continued economic success is not a given.

"The world is changing; the global economy is changing; our own economy is changing.

"It is incumbent upon us all – but especially those in the public sector – to prepare for these changes.

"And when I say ‘to prepare’, I do not mean ‘to monetise’. Instead, I mean to adapt, to on-board and maximise new technologies, to exploit opportunities and minimise challenges.

"The OECD’s Survey identifies some of the challenges and offers potential solutions. It is a crucial piece of the architecture and provides an important template that should be studied by all domestic policy makers.

"Thank you."