Ireland’s seasonally adjusted trade surplus slipped by 1% to €3.8bn in February, although another strong export performance is anticipated for 2015, as a whole.
Latest preliminary CSO figures, released yesterday, showed a 3% – or €238m – monthly rise in export value to just over €8.5bn for February. A marginally higher (6%) increase in import performance, for the month, pushed the trade surplus down by €34m. February’s surplus reduction came after a more pronounced 11% drop from December to January.
Nevertheless, commentators are upbeat about Ireland’s external trade outlook for the current year.
“[The] trade data for February suggests that Ireland’s export performance has improved, markedly, in early 2015 – benefitting from the weakness in the euro. Nominal goods exports were €8.5bn in February, up 16.9% on the year.
“The trade balance was €3.8bn on the month, above the €3bn average through 2014,” remarked Conall MacCoille, chief economist at Davy Stockbrokers.
“Ireland’s volatile trade data have been buffeted by developments in the pharmaceutical sector, such as the patent cliff and, more recently, contract manufacturing. [The latest] data, which are unaffected by contract manufacturing, show strong growth in pharmaceutical exports, up 23% year-to-date.
“This suggests that activity is recovering after the negative impact of the patent cliff in 2012 and 2013. This is not surprising, given recent investments by multinational companies operating in Ireland in R&D, plant and machinery to help bring online biopharmaceuticals and niche drug products,” he added.
Davy also noted that far from being reliant on pharmaceuticals, Ireland’s export performance was boosted by goods exports rising by 9% in the first two months of the year; hinting that overall exports are expanding at a stronger pace this year, following 2014’s modest recovery.
“The pick-up in the export sector has also been evident in Irish industrial production data. Output in the traditional manufacturing companies was up 11% in January and February, following the 6.3% growth recorded in 2014,” Mr MacCoille added.
However, Alan McQuaid – chief economist with Merrion Stockbrokers – said that it could be difficult for Ireland to maintain and grow market share in an ever-more competitive environment, even with the benefit of a sharply weaker euro; but noted the currency will help, as will the country’s close trading links with two of the better performing world economies in the form of Britain and the US.
“Although not as strong as 2014, we still see Irish exports of goods and services posting a high single-digit volume increase in 2015, which should help contribute to another 4%+ GDP growth rate this year,” said Mr McQuaid.
He said the indications are that both the US and UK economies will perform well again, this year, while “competitive gains made against the rest of the euroland, in recent years, have also helped Irish exporters”.
Revised CSO data shows that Ireland’s overall trade surplus amounted to just over €35.7bn last year, down from just under €37bn a year previously. Exports were up by 2.4% last year, while imports rose by 6.8%, their highest level for six years.
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