Concerns despite trade surplus up 11%

There was an 11% increase in the seasonally adjusted trade surplus for March to €3.489bn, although the headline figure masks underlying trends that could cause future problems.

There was a seasonally adjusted increase in exports of €272m to €7.287bn in March compared with the previous month, although there was a €680m decrease compared with the same period last year.

The ‘pharma patent cliff’ was one of the reasons for the drop-off in exports over the past year.

“Within the data we see that of the nine principal export categories, only two — food and beverages and tobacco — recorded positive year-on-year growth in the first quarter. Particularly weak performances were recorded in chemicals and related products (-11.4% y/y; driven by a 16.7% fall in organic chemicals and a 13.6% decline in medical and pharmaceutical products) and mineral fuels (-70.2% y/y),” said Investec economist Emmet Gaffney.

Over half (57%) of all exports go to the EU and 26% to the US. The value of imports fell by €858m to €4.129bn between February and March. The biggest decrease in imports was in the transport equipment sector, including aircraft. There was also a big decrease in the import of medical and pharma products.

Two thirds of imports came from the EU, 10% from the US and 6% from China. However, the EU remains mired in recession. According to figures released on Wednesday, the eurozone has posted six consecutive quarters of economic contraction.

“We must use the EU presidency to move rapidly on a stimulus package to get growth back into industry and consumer markets,” said president of the Irish Exporters Association (IEA), John Whelan. “We must also look to cutting the Irish cost base on an urgent basis to assist export competitiveness utility costs; waste removal costs, general services cost are significantly higher than in the UK”

“Services exports are not covered by today’s CSO release. These grew by 8% in the first quarter, and will be the main driver of export growth again this year. However, manufacturing export companies created twice the number of added jobs in the economy, as do services export companies, and hence the urgent need for added support for the manufacturing sector,” he added.

Merrion Stockbroker economist Alan McQuiad is forecasting a 4% volume increase in the exports of goods and services this year, “but with the risks to the downside, especially as the sluggish external demand conditions which acted as a drag on the performance of merchandise exports last year are likely to persist in 2013.”