NEW YORK (TheStreet) -- It's more than the luck of the Irish that has the country's stocks surging this year said Kieran Donoghue, executive vice president at IDA Ireland.
"I think what's really driving this is renewed confidence in the Irish recovery story and the fact that we had the highest growth rate on a GDP basis" in the European Union last year, said Donoghue about the 16% year-to-date jump in the iShares MSCI Ireland Capped ETF. "I think investors are looking at Ireland now and they see that success story and they want to be part of it."
Ireland's GDP grew 4.8% in 2014, fastest in the EU. In other words, the emerald isle has clearly come a long way from the financial crisis when it was grouped with four other economically shattered Eurozone nations -- Portugal, Italy, Ireland, Greece and Spain -- to make up the so-called PIIGS.
So how did Ireland emerge from one of five PIIGS to the leader of the pack?
"Firstly, we recognized we had a problem. Secondly, we engaged in constructive dialogue with our creditors. We came up with a plan. We agreed to that plan with the [International Monetary Fund] and the [European Central Bank] and we executed on it. We targeted our deficit. We needed to get it down from 10% to 3% of GDP and we are on track to do that," said Donoghue.
Unlike Greece, which rejected austerity and is now on the brink of leaving the Eurozone, Ireland stuck to its fiscal diet and emerged leaner and more competitive.
"We cut back on public expenditure and we came up with a plan to tackle the fundamental reduction in competitiveness that affected the economy over the previous ten years and we've executed really well against that," said Donoghue.
Irish banks have also bounced back from the brink of insolvency, said Donoghue, who represents the government agency responsible for inward investment.
"The banks right now are in a good place. One of our key strategies to recover from the crisis was to restructure and recapitalize the domestic banking sector. We've done that successfully. A number of investors have invested in the domestic banks," said Donoghue. "Separate from the domestic banks, the international financial services sector in Ireland which I represent has gone from strength to strength. All of the key players from theStreet - J.P. Morgan, BNY Mellon for example - have very successful operations in Ireland and that segment of the financial services industry continues to grow."
China is now knocking on Ireland's door as well, according to Donoghue, with the International and Commercial Bank of China and the China Development Bank establishing major leasing operations in Ireland.
One area of concern for Ireland is the possibility the U.K., the country's neighbor and largest trading partner, is debating its membership in the E.U. Donoghue said the Irish business community is against the U.K. pulling out.
"If they were to leave, it would create some significant challenges for Ireland," said Donoghue.