Goods exports fell in August, but a trade expert has said that an exceptional “golden period” for Irish exporters is set to continue through 2016.
The CSO figures showed exports on a seasonally- adjusted basis fell to €8.66bn in August, down from €8.78bn in the previous month and marking their lowest level since January. However, exports are still higher than the €8.38bn level reached in August 2014.
Unadjusted figures show that goods exports of medical and pharmaceutical products surged 39% since August 2014, but that exports of organic chemicals fell by 23%, while machinery and transport equipment export were also down in the year, by 16%.
However, John Whelan, a former head of the Irish Exporters Association and trade consultant, said that exporters were still likely to benefit from the enormous tailwind provided by the weakness of the euro against sterling and the dollar.
Despite rising in recent weeks, the euro had plunged 16.5% against the dollar by the end of September since the start of the year, and was 9% lower against sterling, he said.
That means unprecedented gains for exporters here because the competitive currency makes it considerably easier to sell goods and services to Ireland’s major markets.
At around 73p, the euro is trading against sterling way below the rate of 78.7p when Ireland struck the conversion rates to enter the single currency in the late 1990s, he said.
That means exporters to Britain having the most favourable rate against sterling for almost 18 years. Mr Whelan said that despite the “blip up” in recent days, the currency will likely to benefit exporters through 2016.
Though the timing is hotly debated, UK and US interest rates increases will inevitably take place, and the rate rises will keep sterling and the dollar high relative to the euro. It would take major policy reversals by Bank of England governor Mark Carney and US Federal Reserve chairwoman Janet Yellen not to raise rates, Mr Whelan said.
At the same time, the ECB is still pondering whether to extend its quantitative easing to boost the eurozone economy. The euro tumbled yesterday as the ECB’s Ewald Nowotny said the institution is “clearly missing” its inflation goal before a report due today.
“The ECB should be very worried about the failure of inflationary pressures to start recovering,” said Jane Foley, senior foreign exchange strategist at Rabobank International in London.
“There’s the potential for them to step up their doveish rhetoric”, in which case the euro will fall “a little bit lower” during the next three months, she said.
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