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Charles Sizemore
Charles Sizemore
Articles (507)  | Author's Website |

Ireland’s Demographics Point to Bright Future

September 05, 2013 | About:

The Irish are fleeing Ireland at the fastest rate since the Potato Famine.

Think I’m exaggerating? I assure you I’m not. Recent data had one person leaving the Emerald Isle every six minutes.

Since the onset of the financial crisis, nearly 400,000 people have left Ireland. That may not sound like much at first, but the population of the entire republic is only about 4.5 million. That means one out of nine Irishmen has left the country in just the past five years.

Some wandering Irish have since found their way back home, but the flow remains unmistakably outward.

This may sound counterintuitive, but I consider the Irish willingness to wander a source of strength, and it is a reason why I expect Ireland will eventually emerge from Europe’s sovereign debt wreckage in better shape than some of the other hard-hit countries such as Italy or Spain. Let’s consider a few demographic points.

To start, even after years of crisis, the Irish have maintained a much higher birthrate than their Catholic brethren in the Mediterranean. Ireland has the highest birthrates in the European Union. Interestingly, nearly a quarter of babies born in the republic were to mothers born outside the country—this gives you an idea of how cosmopolitan Ireland became during the high-immigration boom years.

Putting numbers to it, Ireland’s total fertility rate for 2011 (the last year for which there is final data) was 2.1 babies per woman. In both Spain and Italy, the number was 1.4 babies per woman.

Aside from being interesting factoids for cocktail conversation, why does this matter?

It matters because the babies born today are the workers and—even more importantly—the consumers of tomorrow. A country without a healthy birthrate is a country without a future. The modern consumer economy depends on a steadily increasing supply of consumers to function; it’s hard to run a business when your pool of potential customers gets smaller every year. Look at urban wastelands like Detroit—which has seen outward migration for decades—and you’ll see what I mean.

But didn’t I just say that Ireland is hemorrhaging people? I did. But those stats did not tell the entire story. Yes, nearly 400,000 Irish have left the country. But about 277,000 of them have returned or have been replaced by new immigrants. And as Ireland’s unemployment rate continues to tick downward, I expect many of the young Irish who left to work in the UK, Canada or Australia to make their way back home, and bring with them the skills and experiences they picked up while abroad.

This won’t happen tomorrow. But ten years from now, the Irish workforce may be the envy of Europe.

All of that is great, but what does any of this have to do with money and investing?

To start, Irish stocks have quietly been enjoying a bull market as the country works its way out of its long recession. The iShares MSCI Ireland ETF (EIRL) is up over 40% in the past year.

I’m not suggesting you go run out and buy Irish stocks today. The overall Irish market is far too heavily concentrated in basic materials for my liking.

But I would definitely recommend keeping an eye on Ireland as a hotbed for innovation in the years ahead. This is the country that revolutionized European air travel with Ryanair (RYAAY), the European equivalent of America’s cut-rate Southwest Airlines (LUV). Ireland’s demographic convection current of constant inward and outward migration gives it an intellectual and commercial vitality you would normally expect to see somewhere like Silicon Valley.

Think about that over your next Guinness.

About the author:

Charles Sizemore
Charles Lewis Sizemore, CFA is the chief investment officer of Sizemore Capital Management. Please contact our offices today for a portfolio consultation.

Mr. Sizemore has been a repeat guest on Fox Business News, quoted in Barron’s Magazine and the Wall Street Journal, and published in many respected financial websites, including MarketWatch, TheStreet.com, InvestorPlace, MSN Money, Seeking Alpha, Stocks, Futures and Options Magazine, and The Daily Reckoning.

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