Until the 1950s, Ireland had a predominantly agricultural economy, with agriculture making the largest contribution to the GNP. However, liberal trade policies and the drive for industrialization stimulated economic expansion. In 1958, agriculture accounted for 21% of the GNP, industry 23.5%, and other sectors 55.5%. By 2001, however, agriculture accounted for only 4% of the total, industry 36%, and services 60%.
Ireland's economy was initially slower in developing than the economies of other West European countries. The government carried on a comprehensive public investment program, particularly in housing, public welfare, communications, transportation, new industries, and electric power. Since the 1960s, the government tried to stimulate output, particularly of goods for the export market, and manufactured exports grew from £78.4 million in 1967 to £11,510 million in 1992.
During the early 1980s, Ireland suffered considerably from the worldwide recession, experiencing double-digit inflation and high unemployment. The economy continued to lag through 1986, but the GNP grew 30% between 1987 and 1992, and continued at a yearly pace of about 7.5% until 1996 when it was expected to slow to about 5.25%. However, the Irish economy grew faster than any other in the European Union during the so-called "Celtic Tiger" years of the second half of the 1990s, when growth rates were in double digits. The good economic performance was mainly due to strong consumer and investor confidence and strong export opportunities. Ireland suffered from the global economic slowdown that began in 2001, however, and the country's economic growth was forecast for 3% in 2003 and 4% in 2004. Tax increases were expected for both 2003 and 2004 as the country was in a weaker budgetary position in 2003.
Although substantially lower than in 1986 when it topped 18%, unemployment remained high until 1998, when it dropped to 7.7%. It was expected to rise from 5.3% in 2003 to 5.5% in 2004. The inflation rate stood at 2.4% in 1998 and was forecast to average 4.3% in 2003 and 3.3% in 2004.
Ireland has depended on substantial financial assistance from the European Union designed to raise the per capita gross national product to the EU average. Almost $11 billion was allocated for the period 1993–99 from the EU's Structural and Cohesion Funds. During the 1990s, living standards rose from 56% to 87% of the EU average. Services, pharmaceuticals, and information technology are important sectors of the economy in the 21st century.