Dip in July exports raises question about outlook

Exports have fallen to their lowest level since March, official figures published yesterday showed, raising the first question about whether a remarkable upsurge that is driving the economic recovery can last.

The CSO said exports fell in July to €8.76bn from €9.35bn in June, and were also down from the €9.35bn mark in May. Exports recorded their lowest level since March, when it was €8.73bn.

Exports have been helped this year by a slump in the value of the euro against sterling, boosting the price competitiveness of goods sold by Irish firms into Britain.

Export of both goods and services is also driving an extraordinary upswing in GDP, with Finance Minister Michael Noonan indicating that he expects the economy will grow 6% this year.

GDP surged in the three months to the end of June, by 1.9% from the previous quarter, and by a huge 6.7% in the year, CSO figures last week showed. 

The debate has started about how long such a winning streak can last. However, goods exports, although down in the month, remain higher than the €6.95bn seasonally adjusted level posted in July, 2014.

“Last year saw very strong growth in Irish exports, but it will be difficult to increase, and actually maintain, market share in an ever-more competitive environment, even with the benefit of a sharply weaker euro,” said Alan McQuaid, chief economist at Merrion Capital. 

“That said, Irish exporters should continue to perform well on a relative basis.”

Imports in the latest month remained fairly high, which meant that the monthly trade surplus fell to €3.62bn, from €4.12bn in June. More than a fifth of all the €5bn goods Ireland exported to the EU were accounted for by products sold into Britain.

Investec Ireland chief economist Philip O’Sullivan, said that “notwithstanding” the seasonally adjusted drop in exports, “this year is shaping up to be a vintage one for merchandise trade. 

"Buoyed by ongoing supportive FX rates and the not unrelated improving signs emanating from a number of Ireland’s key trading partners, we expect to see a strong performance from Irish merchandise exports into the year-end at least.”


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