However, on the back of a clear recovery in overseas economies, exports and production have continued to increase. In the corporate sector, a virtuous cycle in which a recovery in profits leads to an increase in business fixed investment has started to operate.
Ireland’s role in global financial intermediation means that traditional interpretations of balance of payments flows are not too helpful and the patterns of ultimate ownership are quite different to those suggested by the residence of investment vehicles. Put differently, the geography of risk also matters. Contagion can travel across borders because of the international nature of their assets and liabilities.