Six-year low for trade surplus

The trade surplus has fallen to its lowest level since July 2008 as the CSO recorded more than a €250m drop in the value of exports and a steep increase in the value of imports.

The volatile pharmaceutical industry is largely to blame for the narrowing of the trade surplus, both on the import and export side.

The sector saw a steep decline in the export of organic chemicals, down €339m or 16%, and nearly a €200m fall in the export of medical and pharmaceutical products.

On the imports side, the value of organic chemicals skyrocketed by 176%, increasing by nearly €340m.

While this negatively affected the trade balance in March, it is a good indicator that there will be an increase in chemical exports in coming months.

Analysts have been obsessing over the fallout of the so-called patent cliff on Ireland’s lucrative pharmaceutical industry. Despite the fluctuations, the figures suggest that the economy is managing to overcome the expiry of the patents.

Davy chief economist Conall Mac Coille said the figures indicated that the rise in demand for goods from homegrown manufacturers was picking up the patent slack.

“Today’s data show nominal goods exports down 0.5% in [the first quarter] compared with 2013, comprising a 2.8% drop in pharmaceutical exports and a 1.6% rise in other goods. This suggests that the underlying picture is still one where the drag from the pharmaceutical patent cliff is slowly diminishing and indigenous manufacturers are benefiting from stronger demand.”

The increase in imports, which saw the value of machinery and transport equipment rise €258m, was a sign the domestic economy is recovering, according to Investec economist Philip O’Sullivan.

“On the import side, the buoyancy here chimes with a host of signals which point to the domestic economy having made a meaningful return to growth,” he said.