Exporters in First Quarter Show Very Strong Growth, But Risks Still Prevalent for Rest of Year PDF Print E-mail

Thursday, 26th May 2011 (Source: IEA) 

The Irish Exporters Association report a stronger that anticipated growth in exports in the first quarter of 2011, but warn of the risky international trading climate.  Export growth of 9.4% was achieved in the first three months of the year, with a strong boost coming from exporters of merchandise goods who increased sales by 10.5%.

Based on an overall 9.4% growth in exports, both merchandise and services, for the first quarter of 2011 the Irish Exporters Association (IEA) has increased its growth estimates for the full year to 9.1% or an increase of €14.8 billion in the full year. As late as January of this year the IEA was forecasting overall growth of 7.2%. However, the IEA warned that export growth cannot be taken for granted and pointed to the potential for de-railing of global trade if fuel prices increase higher in the wake of turbulence in oil producing counties, by the full impact of the Japanese disaster on world trade, by interest rates rising too high, as well as continued protectionist measures as governments try to protect their employment numbers.

The IEA figures point to particularly strong growth in exports to the USA which grew by 16% and to the UK which grew by 14% in the quarter. The table below illustrates the growth in exports experienced in the first quarter of 2011 compared to exports in the same quarter in 2010.

January – March Comparison
€ Million                        2010 Jan-March                         2011 Jan-March              Diff €                  % Change 
Merchandise                    20,789                                      22,976                    +2,187                   +10.5 %
Services                          16,630                                      17,960                    +1,330                   +8.0%
TOTAL                            37,419                                     40,936                     +3,517                   +9.4 %

Mr John Whelan, Chief Executive at the IEA, said that growth in merchandise exports in the first quarter was driven by the pharmaceutical sector which grew its exports by 19% and the agri-food sector which increased its exports by 17%. Mr Whelan noted that worldwide higher prices for commodities driven by severe weather conditions in many of our competitor countries, the on-going trend of diverting agri-crops to bio-fuels and the extraordinary growth in Asia have all contributed to the continued surge in food exports from Ireland.

In 2010, the pharmaceutical sector witnessed substantial merger and acquisition activity which impacted on output from Ireland, but Mr Whelan was quick to point out that the merger and acquisition activity of last year ultimately led to the rapid growth in output from the sector in Ireland which was experienced in the first quarter of this year. Services exports from Ireland continued to grow at a steady rate with computer services and financial services sectors leading the way.

Mr Whelan noted that the increase in computer services reflected the continued re-configuring of our computer industry away from manufacturing into services support activity. “This also reflects the continued attractiveness of Ireland as a location for high end and back office investment services,” said Mr Whelan.

Outlook Promising, but risks persist
The World Trade Organisation recently released its forecast on global trade growth for 2011 which shows a decline from the heady growth of 14.5% in 2010, to a more modest 6.5% this year. “At the IEA we believe that as a result of a return to greater competiveness in the Irish economy and with world-wide commodity prices continuing strong that Ireland looks set to see its export growth rates exceeding the global average in 2011,” said Mr Whelan.

However, Mr Whelan added that the rate of exchange between the Euro and Sterling and the US dollar was very important to Irish exporters because of the importance of the British and US market to Ireland’s exporting success. He noted that that any further significant weakening of either of those currencies could make life difficult for a large number of Irish exporters.

“At the IEA we believe that rising food prices and the change in global demand patterns which are giving a boost to our agri-food exports will continue. We also believe that the favourable outcome for Ireland in recent mergers and acquisitions in the pharmaceutical sector and the continued foreign direct investment growth in the services sector will be enough to allow us to confidently forecast that export growth for the full year will be higher than we originally forecast.” Mr Whelan added that the IEA has revised upwards its growth performance for export industry in Ireland in 2011 to 10% in merchandise goods exports and 8% in commercial services exports to give an overall export growth of 9.1%, or a €14.8 billion growth in 2011 over 2010.

The following table shows the IEA’s forecasts for 2011 compared to the figures for 2010.

Exports Full Year 2010 – IEA Forecast 2011:
€ Million                               2010 Jan- Dec 2011                         Jan -Dec                      Diff € %                      Change
Merchandise                              89,392                                       98,331                      +8,939                        +10.0 %
Services                                    73,322                                       79,188                      +5,866                        +8.0 %
TOTAL                                    162,714                                     177,519                      +14,805                      +9.1 %

Please click here to view the full IEA Export Performance Review Quarter 1 2011.

ENDS

For Further Information Contact: Mr John Whelan Chief Executive, Irish Exporters Association Telephone: 087 927 1243