A DROP in the value of exports of 4% month-by-month, coupled with a 3% rise in import value, led to a 9% reduction in Ireland’s trade surplus to just over €3.8 billion in August, according to latest figures from the Central Statistics Office (CSO).
The surplus fell from a record high of €4.2bn in July; but was still well ahead of the €3.25bn generated in June and the downward move shouldn’t harm overall annual targets, according to commentators.
“Although some loss of momentum is likely in the merchandise export performance over the next few months, the bottom line is that the export sector offers the one ray of light at the moment in a fairly gloomy economic picture, and will be the key driver of the Irish recovery story. Indeed, there is still every chance that the overall merchandise trade surplus will be over €40bn this year, a new record high,” said Alan McQuaid, chief economist at Bloxham Stockbrokers.
“Irish exports continued their strong performance in 2010. While August exports dipped slightly on the near-record levels seen in July, they still were 14% higher than in August 2009.
“Irish merchandise exports were 4% higher in the second quarter compared to the first and are set to grow by a further 6% in the third quarter,” added National Irish Bank economist, Ronnie O’Toole.
“However, reflecting the weak state of domestic demand, imports are likely to contract in Q3, pushing Ireland closer to a balance of payments surplus as early as this year.”
He said: “The scale of the UK’s austerity programme, as announced by George Osborne, is stoking fears as to the prospects for UK growth.
“The UK is set to remove 490,000 public sector posts, which when adjusted for population size, would be equivalent to 36,000 in Ireland. He is going to further slash welfare rates in an effort to eliminate Britain’s structural deficit in the lifetime of the current parliament. If the British economy does perform much more poorly than expected, it could both weaken the economy and sterling, with knock-on consequences for Irish exporters,” said Mr O’Toole.
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