The Irish Economy

JUNE 2013

Ireland Greece EU Population 4,588,252 (2011) 9,903,268 (2011) 503,679,730

Area 84,420 km2 131,990 km2

Gross GDP figure €144 billion €227 billion €15,650 billion

GDP per capita €35,455 €20,400 €27,475

GDP Growth

2011+1.4% -7.9% (Calendar year 2011)

2012+0.9% -6.9% -0.5%

2013 (f)+1.5% D/Finance Forecast -4.3% M/Finance +0.4% (Commission)

Unemployment: 14% (March 2013) 27.2% (February 2013) 10.9%

Youth unemployment: (15-24) 30.3% (March 2013) 57.6% (February 2013) 23.5%

General government deficit/GDP

2011-13.4% -9.4%

2012-8.2% -6.9%

2013 (f)-7.5% -4.6 %

2014 (f)-5.1% - 3.5%

Primary Surplus Target 2014 2014

Debt/GDP 118% 170%

Fiscal Consolidation 21% of GDP (since 2008 to end 2015)

Over 40% of GDP (since 2010 to end 2015)

Total Exports (2011) €92.9 billion €22.45 billion €1.5 trillion

Bilateral Merchandise Exports(to end-year 2012)

€257 M (€304 M 2011)

€24 M (€39 M 2011)

Balance of Payments €3.2 billion -€2.2 billion €28.3 billion

Inflation (HICP) 1.68% (Dec. 2012) 0.33% (Dec. 2012)

Programme Funding

2010-- €29 billion (1st programme)

2011€31.5 billion €44 billion (2nd programme)

2012€21.3 billion €128 billion

2013€13.7 billion €17.6 billion

2014-- €18.2 billion

€85 billion total by end 2013, including €17.5bn Irish funds plus €67.5 billion EFSF/IMF funds

€110 billion in 1st package, plus €130 billion in 2nd, to be disbursed by end 2015

Bank recapitalisation €64 billion €50 billion

Origins of the Irish Crisis

2002-2006 •Sustainable export-led growth of the Celtic Tiger period gave way to expansion reliant on a property bubble

2007-2008 •Ireland had been running a budget surplus and low debt levels but domestic bubble burst at the same time as the global financial crisis

2010 •Powerful and sudden impact on our domestic banking system, on employment, and on government deficits and debt, necessitated EU-IMF programme of assistance.

2011- •Now on road back to sustainable growth and balanced finances with a smaller, well-capitalised banking system

Ireland Greece EUGDP Growth

2011 +1.4% -7.9% (Calendar year 2011)

2012 +0.9% -6.9% -0.5%

2013 (f)+1.5% D/Finance Forecast

-4.3% M/Finance

+0.4% (Commission)

Unemployment: 14% (March 2013)

27.2% (February 2013)

10.9%

Youth unemployment: (15-24)

30.3% (March 2013)

57.6% (February 2013)

23.5%

EU/IMF Programme

€40.2bn

€22.5bn

4.8

€17.5bn

EU IMF Bilateral (UK, Swe, Den) Ireland• €85bn [€67.5bn in multilateral and

bilateral loans, €17.5bn from Ireland’s own resources]

• 190 individual targets under programme fully achieved

• Intend to exit the programme and make full return to markets in 2013

Stabilising the Public FinancesWe are on course to meet our 3% deficit target by 2015

Deficit forecast to be reduced

below 3% in 2015

We have implemented measures to yield a

budgetary adjustment of €29bn (or about 18% of GDP) since mid-2008

Budget 2013 delivered another

€3.5bn of that consolidation Deficit of

7.6% in 2012

Government Deficit Being Brought Down Steadily and On Target

2007 2008 2009 2010 2011 2012 2013 2014 2015-13

-11

-9

-7

-5

-3

-1

1 0.1

-7.4

-11.5-10.7

-9.1

-7.6 -7.4

-4.3

-2.2

Government Primary Balance

% of GDP

*Excludes costs of bank recapitalisations

Department of Finance

Department of Financeforecasts

The economy has returned to growth

Department of Finance

1989199019911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013201420152016

-11

-6

-1

4

9

14

GDP

Gro

wth

% Y

-o-Y

Celtic Tiger Period Domestic Driven Growth Downturn & Recovery

Department of Financeforecasts

2013 to 2016

General Government Debt Will Peak This Year and then Decrease

Department of Finance

2007 2008 2009 2010 2011 2012 2013 2014 2015 20160

20

40

60

80

100

120

140

% of GDP

Department of Financeforecasts

• Up over 5% in 2011 and 5.5% in 2012

at current prices

• Agri-food Exports Up 28% in last 3 years

Exports Now Above

Pre-Crisis Levels• Multinational Sector

Critical incl. Pharma, MedTech, ICT, Financial

Services• Balance of Payments in Surplus for third year in a row after 10 years

in deficit

Department of Finance

Exports Have Supported Growth

€m

Consolidation is being implemented in the least growth damaging way possible, with the majority of

the adjustment on the spending side

Budget 2013 includes just under €2 billion in spending cuts and over €1.4 billion in tax increases.

Tax measures include- introduction of a property tax- increases in capital gains and capital acquisitions tax- increase in excise duty on alcohol and cigarettes- increase on motor and vehicle taxes

Expenditure cuts in 2013 include- reduction of €10 a month in the rate of child benefit-the reduction of the duration of job seekers benefit- further reform of public service conditions

12.5% Rate of Corporation Tax will remain as a key element supporting inward investment and export-led growth

Restoring the Banks to Health

Recapitalised on Time and Below Expected Costs

€64bn, ca. 41% of 2011 GDP

Consolidated, Deleveraged, Reduced in Size

Pillar Bank Strategy in place with 2 main banks, AIB and BoI to focus on domestic economy. Over €40bn in deleveraging

achieved

Action at European LevelAs other EU Member States face similar

challenges, Europe is working on new ways to break the link between sovereigns and banks

Continuing Challenges

Jobs added in 2012 but unemployment unacceptably high

Household Debt Elevated

Impact of expiring patents in

pharmaceutical sector on export growth

International Economic Conditions

Our Strengths

Flexible, Adaptable Economy•1st in the world for the

flexibility and adaptability of our people

•2nd most globalised country in the world

Pro-Business Environment

•1st in the world for investment incentives

•In top 10 easiest countries in the world to start a business

High Levels of Education•In Top 10 most

educated countries in world

•1st in the world for availability of skilled labour

Favourable Demographics

Youngest population in Europe

Sources: World Bank, OECD, IMD Competitiveness Yearbook 2012, Eurostat, E&Y, Economist Intelligence Unit

1st in the Eurozone for ease of doing

business

2nd highest trade

surplus in Europe

2012 saw highest net job creation in

Ireland from Foreign Direct

Investment in a decade

1st in the world for highest average value

from investment

In global top 20 for quality of scientific

research