BRUSSELS, Belgium: The European Commission has expressed its optimism in Ireland's economy, saying it anticipates a strong, export-led rebound in the second half of 2021.
At the same time, it warned that the government's budgets are at risk from "potential changes to the international taxation environment," expected to be caused by a planned overhaul of corporate tax rules internationally.
The EU's Spring 2021 Economic Forecast said it anticipates the Irish economy to grow by 4.6 per cent in GDP terms this year, up from 3.4 per cent previously, and by 5 per cent in 2022.
As a comparison, the euro zone economy is expected to increase 4.3 percent in 2021, and 4.4 percent in 2022.
EU economic officials expect the Irish economy to show a strong recovery in the second half of 2021, with increasing exports.
"Exports are expected to continue to be a strong driver of GDP growth, led by multinational corporations, particularly those producing medical devices and pharmaceuticals, as well as those providing information and communication services," according to the report.
"Improvements in the external environment, including in the U.S., with which Ireland trades significantly, will benefit the economy," it said.
The Commission noted that Irish household incomes will remain protected from the ongoing impact of the pandemic by support from the government.
It was also noted that Ireland is expected to lose €2 billion or more of its corporate tax base due to proposed changes to the international corporate tax code.
Meanwhile, the U.S. has proposed a minimum tax of 21 percent on the international earnings of U.S. companies, which is much higher than the Irish rate.
The EU noted that Ireland was the only European country to register positive growth last year.