The dying days of July confirmed that Irish exports had indeed hit ‘the sweet spot’, with the release by the CSO confirming services export figures for the first quarter of the year had grown by 15%.
We also had updated goods exports figures showing an 18% growth following adjustment for the inclusion of aircraft exports associated with the Irish leasing operators.
The full exports picture is one of exceptional growth of 17% in the three months of the year.
All the economic indicators show the continuity of this level of export growth into the second quarter, and to the year end.
The last-minute aversion of the Greek exit from the eurozone ensured that the economic growth across the zone continued into the second quarter, driven in no small measure by the ongoing effectiveness of the quantitative easing programme of the ECB, and the boost from the very low oil prices.
Both economic growth in Europe and the competitively priced euro can be expected to continue, given the ECB’s commitment to its €60bn purchase of assets to support growth. There is every reason to expect Irish export growth to continue at the current very strong level.
And the latest Eurostat’s figures show that to the end of May, Irish exporters were indeed making hay, with exports for the first five months reaching an 18% level over the same period in 2014, compared to an EU average export growth of 5%.
There is no doubt that the 24% increase in our exports to the US in the first five months was heavily influenced by the 17.5 % fall in the euro exchange rate against the dollar, compared to the first half of 2014. But the high import activity by the US was spread across all of the EU 28 members, showing that strong growth in the US economy was also a determining factor.
Pent up demand for Irish goods and services from the eurozone, however, has emerged with a bang, with exports to the eurozone growing by 19% in the first five months.
Exports to the UK were of a more modest scale – posting 8% growth compared to the first half of last year. The sterling exchange rate improved the competitiveness of euro-denominated exports by on average 10% across the first half of the year.
This provided huge benefits to Irish SMEs who rely extensively on the UK market. Enterprise Ireland’s plan for 2015 is to enable indigenous – mainly SME – exporters to increase exports by 10%. Achieving this will require sustained fast growth in exports to the UK across the rest of the year.
The only cloud on the horizon is the UK referendum on EU membership scheduled for 2017.
The continued trade sanctions imposed on Russia by the EU and US have had their toll on Irish exports to the region, which are down 48% over the first half of 2014.
The economic slowdown in China, punctuated by the Shanghai stock market burn outs, has also impacted on Irish exports, which grew by a mere 1% in the first half of the year. Irish exports to South Africa fell by a significant 29% and exports to Brazil were down 5% across the first half of the year.
John Whelan is a leading export consultant.
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