Pharma slide masks exports rally

The effect of the pharmaceutical industry continues to distort Irish trade statistics, masking the recovery of Irish indigenous export industry, according to figures from the Central Statistics Office.

The monthly Goods Exports and Imports figures showed that the seasonally adjusted trade surplus improved to €2.9bn in April from March’s €2.4bn outturn mainly on the back of an 11% decline in the value of goods imported, while exports declined by 1%.

Davy’s chief economist, Conall MacCoille said that yet again the impact of the pharmaceutical cliff looks set to drag down Irish GDP figures.

“At face value, these are worrying trends, suggesting that Ireland‘s export sector is not benefiting from the recovery in the euro area and in the UK. But the underlying picture is that the contraction entirely reflects the pharmaceutical sector, with indigenous exporters seeing their revenues rise. So, just as in 2013, it now looks likely that Irish GDP data in 2014 will be artificially depressed by the pharmaceutical sector as the on-going recovery in the domestic economy continues,” he said.

There had been some hope that the import of chemicals that had been reported in recent import and export figures would filter through to a bounce in the pharmaceutical products, but this doesn’t seem to have materialised.

Investec Economist Philip O’Sullivan, said that it may be too early to write off an upswing in the export value of pharma goods.

“The improvement in the industrial production reading for the wider chemicals and pharmaceuticals sector in April revealed last week, suggests that the anticipated upturn in export data for this area may be just running a little slower than we had assumed. Watch this space,” he said.

Looking at the figures for the whole year, imports are up in seven of the nine commodity groups that the CSO examines.

“The upturn in imports reflects the improving signs for the domestic economy in particular, while the recovery across Ireland’s key trading partners should ultimately translate into higher demand for exports,” said Mr O’Sullivan.