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News : Irish Economy Last Updated: Feb 18, 2014 - 6:38 AM


Irish goods export performance in 2013 back to 2008 level
By Finfacts Team
Feb 16, 2014 - 4:40 AM

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Irish goods exports fell in 2013, mainly reflecting the decline in pharmaceutical exports by American-owned firms - -  pharmaceutical /chemical exports accounted for 58% of merchandise exports in the year, the same level as in 2012.

The CSO said Friday that preliminary figures for 2013 indicate a decrease in the value of exports of €4.8bn (-5%) to €86.89bn from 2012. Imports were up by 1% to €49.63bn resulting in a 12% fall in the trade surplus to €37.25bn. This is the lowest annual trade surplus since 2008.

The main changes in 2013 for exports were:

  • Exports of Medical and pharmaceutical products fell by €2.94bn (-12%) to €21.62bn, Organic chemicals by €1.76bn (-9%) to €18.29bn and Petroleum by €824m (-53%) to €721m.
  • Exports of Food and live animals increased by €616m (+8%) to €8.75bn.

In 2013, the United States (21%), Great Britain (14%), Belgium (13%) _Europe's main air freight hub -- and Germany (8%) were Ireland’s main export markets, accounting for 56% of the value of exports.

The main changes in 2013 for imports were:

  • Imports of Medical and pharmaceutical products increased by €345m (+8%) to €4,51bn and Food and live animals by 8% to €6.05bn.
  • Imports of Other transport equipment (including aircraft) fell by €1.47bn (-60%) to €1.01bn.

In 2013, Great Britain (32%), the United States (11%), Germany (8%) and China (6%) accounted for 56% of the value of imports.Preliminary estimates for December 2013 show seasonally adjusted exports of €7.74bn, up 11% on November 2013 and seasonally adjusted imports of €4.30bn.

Conall Mac Coille, chief economist at Davy commented: "Today’s trade data for December show that exports in 2013 were €86.9bn, down 5.2% from the €91.7bn recorded in 2012. This is the weakest trade performance since 2008, when goods exports equalled €86.4bn. In volume terms, exports fell by 5.6% in 2013 to their weakest level since 2006. Goods imports actually rose slightly from €49.2bn in 2012 to €49.6bn in 2013. This meant the trade surplus in 2013 was €37.2bn, down from €42.5bn in 2012, the smallest surplus since 2008.

The poor performance in Irish exports last year reflected the negative impact of the euro area recession, accentuated by the pharmaceutical patent cliff. Medical and pharmaceutical products exports fell by €2.9bn in 2013, or by 12%, and organic chemicals by €1.8bn, or 9%. These two sectors accounts for 98% of the €4.8bn drop in Irish goods exports in 2013. This means goods exports excluding pharmaceuticals were broadly flat on the year, down -0.3%.

Looking at the trends through 2013 suggests that the emergence of the euro area from recession is slowly pushing up on demand for Irish exports. Figure 1 illustrates that in Q4 2013 goods exports were up 1% and 6% excluding pharmaceuticals (which were down 3%). This is consistent with evidence from Irish industrial production data, also showing more favourable trends among traditional manufacturers but with the modern sector dominated by multinational pharmaceutical companies suffering sharp falls in output. Despite today’s poor trade data, we remain optimistic that stronger euro area and UK GDP growth in 2014 will help Irish export growth in 2014. It is worth noting that today’s data contained no information on Irish services exports, which will only become available with the Q4 GDP data.

Of course, the ultimate impact of the pharmaceutical patent cliff remains uncertain. But, as in 2013, should pharmaceutical goods continue to contract, there is likely to be a negligible impact on employment or domestic demand. As we set out in our recent Davy Economics Monthly article, 'Explaining Ireland’s Productivity Puzzle,' pharmaceutical companies employ only 40,000 people and there has been little sign of falls in aggregate employment even within the sector itself. In contrast, stronger euro area demand will help jobs growth in the traditional sector, which provides two-thirds of industrial sector employment."

Ireland's services exports for 2013 will be reported in March and at least 40% of the total will have been related to tax avoidance.

Davy's answer to the productivity puzzle does not address the jump in services exports that do not reflect economic activity in Ireland.

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