Ireland’s trade surplus set to beat 2009 figure

IRELAND’S total trade surplus for 2010 is still expected to beat that of last year despite a disappointing 20% drop in June, the latest month for which figures are available.

Those latest monthly external trade figures – published yesterday by the CSO – show that the value of exports from Ireland declined by 5% in June, compared to May, while import value rose by 12%.

This pattern led to a drop in the monthly trade surplus from just over €4 billion (which equated to a 40% increase in May) to €3.2bn.

Commentators are, however, still hopeful that this year can produce a slightly bigger surplus than last year’s €39bn, which was the highest on record and €10bn more than 2008’s final figure.

“The bottom line is that the export sector will be the key driver of the Irish economic recovery going forward,” said Alan McQuaid, Bloxham Stockbrokers’ chief economist.

“The trade performance last year was quite impressive by international standards and we expect another solid performance in 2010, all things considered, with a merchandise trade surplus of over €40bn.

“The most recent PMI surveys show that export orders, which boosted the Irish economy in the first quarter, have begun to slow in both the services and manufacturing sectors but domestic activity is picking up the slack.

“But it is hard to see domestic demand holding up if fears about the weakening health of the US economy intensify,” he added.

Aidan Corcoran of Davy Stockbrokers said: “Ireland’s terms of trade – the ratio of the export price index to the import index – has posted an upward trend this year. Interpreting this figure is difficult, as it incorporates the effects of currency movements. However, a rising relative price of exports could be a cause for concern about Ireland’s competitiveness.”