Surging exports on the back of a competitive euro and a recovery in the value of the huge amount of pharmaceutical products made in Ireland is likely to soon trigger a new round of upgrades in projections for economic growth.
The CSO figures published yesterday showed the value of goods exported in the first quarter of the year had climbed to €24.95bn from €21.25bn a year earlier, confirming that a pick-up in Ireland’s largest trading partners — Britain and the US — is driving a long- delayed strong recovery for exports.
Unadjusted figures showed that, led by medical and pharmaceutical products, exports surged in March alone to over €9bn, their highest value since May 2002.
Seasonally-adjusted figures showed that though down by €164m in March from February, exports had risen almost €1.45bn from March last year.
Analysts say that exports have now weathered some of the toughest head-winds, including the ending of many global pharmaceutical patents, which had stripped much of the value off the blockbuster drugs made in Ireland and exported around the world.
Quantitative easing by the European Central Bank however, was now helping to keep the euro low against sterling and the dollar, at a time when the key British and US economies were expanding and sucking in more relatively cheap Irish exports.
The CSO said 56% of the goods exported in March were bound for the EU, while 23% went to US and 13% went to Britain. However, Davy Stockbrokers chief economist Conall Mac Coille said because a significant slice of all exports into Britain were driven by traditional labour-intensive manufacturing such as food and beverages that the “competitive gains from the weak euro for Ireland are greater than they appear at face value from the trade data”.
Recent investments and job announcements by pharmaceutical companies in also suggested a healthy outlook for exports from the large number of multinational drug manufacturers based here, he said.
Davy forecasts GDP will expand 3.7% this year and 3.4% in 2016.
However, Mr Mac Coille said these projections may be overly timid and that the broker may look again at increasing the growth forecasts in the coming weeks.
The Economic and Social Research Institute has the most optimistic outlook and forecasts growth will surge this year by 4.4%. The Department of Finance forecast last month that the economy would expand by 4% this year, while the IMF and the Central Bank see growth rates of 3.9% and 3.8%. The European Commission said earlier this year that GDP would expand 3.5%, while the OECD projects a growth rate of 3.3%.
The main forecasting organisations expect that the economy will expand 3.2% to 3.8% in 2016.
Mr Mac Coille said that the economic recovery started in 2013, but that the huge amount of pharmaceutical products exported by multinationals had distorted the trade data in recent years.
Exports last year of €89.2bn were still below the €91.7bn exports recorded in 2012. However, the weak euro is providing a huge boost to exporters.
Reuters data showed sterling has risen about 3.5% since the results of the UK election over a week ago.
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