January sees a record trade surplus

The country recorded its largest ever trade surplus in the opening month of the year after an increase of €1.1bn on the December 2015 figure, but falling exports struck a note of warning as the year began.

The seasonally-adjusted trade surplus for January came in at €4.98bn; eclipsing December’s €3.87bn total.

The January figure beat the previous record month of August 2012 when the adjusted surplus totalled €4.69bn.

Preliminary figures for January show the record surplus was achieved despite a decrease of €624m in exports in the month.

In total, Irish firms exported €9.55bn worth of goods and services in the opening month of the year, a 6% decrease on December’s total as the strengthening euro began to affect Irish exports.

The EU accounted for €5bn, or 56%, of total goods exports while the US was the main non-EU destination accounting for €1.43bn.

The reduced level of export was accompanied by a larger decline in imports as the new year got under way, however, with a 27% fall recorded.

The level of imports fell by €1.72bn to €4.57bn in the month. As a result, the trade surplus shot up by 28% in January.

“There was very strong growth in Irish merchandise exports in 2015, and we think 2016 will see another robust performance.

"But imports also recorded a healthy rise last year, and despite the disappointing start to 2016, we see them posting strong growth this year,” said Merrion Stockbrokers chief economist, Alan McQuaid.

The sharp rise in imports, which climbed from €5.24bn in January 2015 to €6.44bn in the final month of last year, reflected a pickup in consumer confidence during the year which translated into increased consumption.

Meanwhile, last year’s exceptionally strong export performance was aided by a number of factors including the strength of the pound and dollar against the euro as well as the strength of both the UK and US economies.

Recent foreign exchange movements coupled with political developments could prove problematic this year, however.

“Ireland’s trade performance in 2015 benefitted from competitiveness gains made against its main partners and by the weakening of the euro, particularly against sterling and the dollar.

"Against a difficult global backdrop, the strength of the US and UK economies was clearly a factor here.

“However, with sterling starting to weaken against the euro on “Brexit” fears and a less favourable Bank of England interest-rate outlook, that could weigh negatively on Irish exports to the UK in 2016,” Mr McQuaid said.