Domestic growth lagged pre-Covid
Multinational corporations (MNCs) were already outpacing indigenous firms in Ireland before Covid made business conditions more difficult for the domestic sector.
Sectors dominated by foreign-owned companies – such as IT and pharmaceuticals – grew by 6.9pc in 2019, while domestic sectors grew by 4.5pc, according to gross value added (GVA) figures from the Central Statistics Office (CSO).
The figures, which measure contribution to GDP minus taxes and subsidies, show that the growth gap between MNCs and Irish-owned businesses has been made worse by Covid, but was not caused by it.
Overall GVA grew 5.5pc to €325bn in 2019 – the highest ever. Multinational-heavy sectors accounted for €141bn of that while indigenous sectors made up €184bn.
Among the largest MNC- dominated sectors, the fastest growers were media, IT and chemical manufacturing, which includes pharma. Growth was positive for the non-MNC sectors in motors, real estate, financial services, support services and professional services.
Construction and agrifood, forestry and fishing were the fastest-growing domestic sectors at 7.5pc and 12pc respectively.
Covid has had a disparate impact on the MNC and domestic sectors this year.
While multinational IT companies in Ireland such as Google and Facebook have been largely unaffected by Covid restrictions, key domestic sectors such as retail, hospitality, and food and drink have suffered disproportionately.
Earlier this month the Central Bank estimated Covid losses to Irish SMEs at between €10.3bn and €11.7bn. In a financial stability note published last week, Central Bank economists warned policymakers to “prepare for the likelihood that some SMEs are unlikely to survive this shock”.
Although the Government has made billions of financial supports available to businesses – including wage subsidies, tax breaks, grants and loans – uptake has been limited for many schemes apart from wage subsidies. Figures released by the Department of Business, Enterprise and Innovation show only one-fifth of the available funding has so far been distributed.
The most recent CSO survey also found that more than one-third of Irish companies were negatively affected by the coronavirus pandemic.
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