Ireland’s trade surplus could be even bigger this year than the record surplus recorded in 2015, despite a number of headwinds affecting Irish exporters.
That is according to Merrion Stockbrokers chief economist Alan McQuaid, who said that, despite a number of factors, including unfavourable foreign exchange movements, and the threat of Britain leaving the EU weighing on Irish exports, a record surplus could be on the cards nonetheless.
His comments came as figures from the Central Statistics Office (CSO) showed a large decrease in the seasonally adjusted surplus for February. The €3.77bn surplus is markedly lower than the record high €4.79bn seen in the opening month of 2016.
Seasonally adjusted exports were down 6.6% in the month at €8.75bn while imports recorded an increase of 8.9%. The 21% decrease in the seasonally-adjusted surplus was largely expected, given the month’s weak industrial output figures, Mr McQuaid said.
Irish exporters have been hit by a weakening sterling, with the cost of their goods in the UK market rising by more than 10%. Exporters here also fear the UK voting to leave the EU.
Despite these risks, the trade surplus in 2016 could outstrip the revised €43.7bn surplus recorded last year. That represented a near-38% increase of €12bn on the previous years’ trade surplus.
“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,” Mr McQuaid said. “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.
“But despite concerns over exports to the UK, we still think the overall trade surplus this year will be higher than in 2015. We are now projecting a positive trade balance of €45bn-46bn.”
Meanwhile, Irish exports to the Middle East and Gulf regions are set to reach €6bn by 2017, three years ahead of forecast.
The 2016 Arab-Irish Business Forum heard Irish exports to Arab markets last year also surpassed forecasts, with the value of goods and services topping €5bn, from a previous high of €4bn in 2014.
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