Trade surplus falls to eight-year low

IRELAND’S trade surplus narrowed to the smallest in eight years in December, with exports and imports both falling significantly.

The surplus, adjusted for seasonal swings, was €1.3 billion, compared with €1.9bn in November and €2bn in December 2006 — its smallest surplus since January 2000, when it was €1.27bn.

A trade surplus refers to the positive balance of trade, which is the difference between the monetary value of exports and imports over a certain period of time.

The CSO said imports fell 13% to €4.9bn in December from the previous month, while exports dropped 17% to €6.2bn.

Exports to the EU as a whole were up 3.9% in the year, although exports to the US were down 1.1%.

Alan McQuaid of Bloxhams Stockbrokers said: “Not surprisingly, exports to the US have started to weaken due in main to the strong euro/dollar exchange rate.

“That said, food exports were quite strong in value terms in 2007, partly reflecting price developments in the sector with particularly robust price increases evident for dairy products and grains.”

He added that the US and Britain account for around 40% of Irish merchandise exports, so the level of demand in these countries as well as what happens on the exchange rate front will be critical for merchandise export performance in 2008.

“Merchandise export growth is projected to moderate somewhat in 2008, although there is some downside risk to this projection, as the full implications of recent financial market turbulence for world demand remain unclear,” he said.

Bloxhams are now forecasting an overall merchandise trade surplus of €26bn this year.

Exports in the 11 months through November rose to €82.8bn, up 4% from a year earlier, boosted by a 19% increase in shipments of organic chemicals, according to the CSO.

Overseas sales of industrial machinery meanwhile jumped 22% during that time.

Overall imports grew 3% in the 11-month period to €57.1bn, with imports of transport goods such as aircraft more than doubling.