Connecting to LinkedIn...

​Red Sea issues will affect Irish economy - IDA chief

Posted on 5 months ago by Laurentina Kennedy

Image 2024 01 17 T14 48 42

Red Sea issues will affect Irish economy - IDA chief

IDA chief executive Michael Lohan is attending the WEF in Davos this week
IDA chief executive Michael Lohan is attending the WEF in Davos this week

The head of IDA Ireland says supply chains and business certainty will be hit by the attacks on commercial shipping in the Red Sea but that Ireland should be able to stand out in terms of trust and stability when it comes to inward investment.

Speaking at the World Economic Forum in Davos today, IDA chief executive Michael Lohan said the impact of attacks on shipping was not yet hitting the Irish economy, but that was likely to change.

"Undoubtedly, we're going to see that over time. We're only coming off the back of supply chain disruption from Covid, we're going to see that again possibly with the Red Sea," Mr Lohan said.

"[However] I think it's going to probably open up more opportunity in terms of supply chain redesign. The risks continue to be there in terms of diverse supply chains, and [companies] looking again for those stable locations where companies can be certain that their supply chain is secure to support their growth and innovation," he added.

IDA Ireland will host a dinner for global chief executives in Davos tomorrow night, which the Taoiseach will attend. It is understood the meeting has been over subscribed.

Mr Lohan dismissed concerns about fluctuations last year in Ireland’s corporate tax take.

"There are two elements to the fluctuation. One is probably a post Covid correction, undoubtedly both in technology and life sciences. We also have to recognise that taxation and corporate taxation reflect revenues and sales and last year there was a lot of uncertainty and maybe downward pressure because of inflation within global economies, and that also impacted sales," he stated.

"But I do believe we're getting to a point of stability. We came out of [2023] with very strong tax returns and it speaks to that strong nature of enterprise that we have in Ireland," he added.

He said he was not concerned that so much of Ireland's corporate tax take came from a very small number of multinational corporations.

"We’re very fortunate in Ireland that we have the largest corporations in the world who have chosen Ireland as their home, not just in the last number of years, but are embedded in Ireland over 30, 40, 50 years. I see that continuing," he said.

"We’re broadening that base. We're broadening through deepening research and innovation across our portfolio. Today, 45% of the IDA's portfolio of companies are invested in R&D and AI. And that's important, because that's the future growth. That's where the future revenues come from," he said.

Responding to last week's ESRI report on problems facing infrastructure within the National Development Plan, Mr Lohan said there may need to be "reprioritisation" of elements of the plan over time.

"Fundamentally, we need to make sure that we get our housing output increased and we need to make that energy transition," he said. "We have brought stability in terms of energy security. We now need to look at the next evolution of that which is sustainable green energy".

Asked if he was concerned about the prospect of a second Trump presidency, following last night’s caucuses victory in Iowa, Mr Lohan said: "I don't believe so.

We are celebrating the IDA's 75th year this year. We've worked with over a dozen administrations in the US, and undoubtedly will work with future administrations as well," he said.

"We’ll have to wait and see what happens. I suppose the choice is for the American people as it should be," he added.