Exports show signs of rallying

The economy may be recovering from the effects of the pharmaceutical cliff as exports from indigenous industries pick-up.

While new figures from the Central Statistics Office showed a 6% fall in seasonally adjusted exports to €7.2bn in January compared to December, on a three-month basis goods exports rose by 2.1% on the year, the first positive growth rate since October 2012.

Davy’s chief economist, Conall MacCoille, said the export figures from the pharmaceutical sector were no longer having the drastic effect on growth that was reported last year.

“Pharmaceutical exports fell by 2.2% on the year, providing a smaller drag than the 10.6% decline in 2013. Non-pharmaceutical goods exports rose by 5.8%, benefiting from the emergence of the euro area from recession and stronger UK demand,” he said.

An increase in demand is welcome news for Ireland as the recent GDP figures for 2013 showed that the country had posted a small contraction due to the expiration of a number of key patent on drugs.

“A key feature of Ireland’s 0.3% contraction in GDP in 2013 was poor export performance. Total exports rose by just 0.3% in 2013 — their worst performance since 2009. Nominal goods exports fell by 5.2% in 2013, led by a massive 10.6% contraction in pharmaceutical goods but with non-pharma exports also contracting by 0.2%, hurt by weak demand. Today’s data tells a different story — the pharmaceutical sector provides a smaller drag and exports in indigenous companies are picking up,” said Mr MacCoille.

The CSO figures are in line with a recovery in trade that is being forecast by the Investec Ireland Export Analysis Report which predicts that demand for Irish exports will improve across all major Irish export markets for the first time ever.

Head of treasury, Investec Ireland, Aisling Dodgson, said exporters should be able to reap the rewards of a global recovery.