Seasonally adjusted imports fell by 11% in December relative to November 2008 and exports fell by 4%. Relative to October 2008, imports fell by 1% in November 2008 while exports fell by 4%. On an unadjusted basis, the value of imports in December 2008 was down 19% on December 2007 while the value of exports was up 9%. The value of imports in November 2008 was down 28% while the value of exports was down 7% on November 2007. Evidence of a collapse in world trade has been growing. Irish exports, which are dominated by US companies, have remained relatively resilient so far.

The January-November figures for 2008 when compared with those of 2007 show that:

Exports decreased from €83,062m to €79,873m (-4%) – Computer equipment decreased by 27%, Organic chemicals by 10%, Vegetables and fruit by 42%, Industrial Machinery by 15% and Metalliferous ores by 21%.

Chemical materials increased by 35%, Medical and pharmaceutical products by 12%, Professional, scientific and controlling apparatus by 30% and Petroleum products by 41%.

Goods to Switzerland decreased by 22%, the Netherlands by 16%, Germany by 10%, Great Britain by 5% and the Philippines by 49%. Goods to China increased by 21%, Malaysia by 52%, the United States by 2%, Spain by 9% and Poland by 34%.

Imports decreased from €58,392m to €52,794m (-10%) – Computer equipment decreased by 26%, Road vehicles by 26%, Aircraft by 17% and Electrical machinery by 13%.

Petroleum products increased by 11%, Natural gas by 36%, Fertilisers by 71% and Medical and pharmaceutical products by 18%. Goods from Great Britain decreased by 7%, China by 18%, France by 13%, the United States by 6%, Japan by 28%, SouthKorea by39%and Germany by 15%.

Goods from Denmark increased by 50%, the Netherlands by 6%, Poland by 65%, Russia by 73% and Finland by 33%.

Dr. Ronnie O'Toole, Chief Economist, National Irish Bank:

Growing evidence of a sharp reduction in global trade....
Since the start of the year, the evidence of a collapse in world trade has been growing, with the dramatic fall in Japanese exports in January of 45% highlighting the shockwaves racing through global supply chains. While falling commodity prices since the summer gave some taste of what was to come, the extent and uniformity of the decline in exports globally has been shocking, although tentative signs of stablisation are now emerging. Particularly hard hit have been consumer durables and investment machinery, both of which Ireland is less exposed to as an exporter.

... as countries like Ireland cut spending ....
Falling imports in Western economies such as Ireland are largely to blame, with American and European buyers pulling back on import orders. CSO figures for December for Ireland showed that seasonally adjusted exports actually grew in December compared to December 2007, though more notable was the sharp fall in imports, particularly from Asia. There are a number of factors behind this fall. Belt tightening by Irish consumers is resulting in falling imports of consumer goods, which are down 10% on the previous year. Further, the postponement of investment plans by firms has resulted in a halving in the value of imported machinery in the final months of the year.

... though changes in Ireland's industrial structure also important...
Most imports into Ireland are, however, of parts and components (particularly in electronics) which are sent for further processing, and are often ultimately re-exported as part of a finished product. Ireland is now importing less of these components for both temporary and permanent reasons. In the short term, declining trade prospects have resulted in firms cutting back the amount of inputs they are buying in the expectation of lower future exports. This compounds a longer run trend in Ireland of a shift out of some areas of electronics - as evidenced by the closure of Dells Irish manufacturing facility - which will reduce Ireland's long-term export and import of electronics.

... while stable exports has resulted in a surge in the trade surplus...
However total exports from Ireland were relatively stable in December, rising by 4% on December 2007, as the growth in pharmaceuticals compensated for the continued decline in electronics. However this still represents a month-on-month fall of 4%. The broad picture of relatively resilient exports is consistent with Eurostat figures which showed that new export orders in Ireland were stable in December. As pharmaceuticals are not as import-intensive as electronics, this has helped fuel the trade surplus, which by the end of 2008 was running at €1 billion a month higher than the end of 2007, while the December figure was the highest monthly trade surplus in almost five years.

. .which will reduce Ireland's current account deficit in 2009.
In total, Ireland's merchandise trade surplus grew by €4 billion to €29.5 billion in 2008, and on current trends will grow by significantly more in 2009. This should result in a halving of Ireland's current account deficit in 2009, which stood at well over 5% of GDP in 2007/2008. This deficit was the result of high investment and consumption levels at the height of the property boom, and its unwinding reflects a - very painful - return of standards of living to more sustainable levels.