Sovereign debt issues across the Eurozone during the third quarter of this year have led to further business uncertainty and weakened consumer confidence globally. Irish exporters have been hard it in this global trade downturn and the Irish Exporters Association (IEA) has issued its Third Quarter Review of exports recently in which it shows that total export sales growth grew by only 1.7% in the third quarter when compared to the same period last year. Most damaging was the drop in manufactured /merchandise goods exports by just under 3%. As a result the IEA has revised downward its projection for full year growth in Irish Exports.
According to Mr John Whelan, Chief Executive at the Irish Exporters Association this is an unexpected turn of events for the Irish export sector and if it continues could derail the Irish economic recovery which has placed a high dependence on the recovery being export-led. “The poor showing of exports in the third quarter, however, does not detract from the positive growth posted so far this year,” said Mr Whelan. He noted that cumulatively for the period January to end of September 2011 exports are still showing a 5.4% growth over the same period in 2010. Figures show that exports of manufactured goods are up by 3.5% over the same period last year and services exports up by 7.9% in the period.
The figures for the third quarter show that the very strong growth in agri-food exports was maintained with growth of 12% which brought the January to September figure to €5.8 billion which is a very credible growth rate for the year of 15%. However, the slowdown in the pharma/chemical sector in the third quarter, combined with the fall in computer hardware exports brought the year to September exports down to a 3.5% growth level. This is below the global growth in merchandise trade and indicates a loss in market share by Irish export industry. Services exports, on the other hand, grew by 7.9% in the January to September period driven mainly by computer services which grew by 13% which means that they now account for 39% of Ireland’s total services exports. Mr Whelan said: “Ireland’s share of the global services market is growing faster than the market which indicates that Irish services companies are increasing their market share internationally.”
New Forecasts for Full Year
A weak and bumpy recovery seems be to emerging in global trade and Irish export industry will need to diversify its export client base to include a higher level of sales to emerging markets. Mr Whelan noted that it is in these emerging markets that economic growth is strongest and it is these markets which are least affected by sovereign debt and banking concerns. The IEA says that in order to achieve the required results in these markets that the Government and state promotional agencies will need to be extraordinarily supportive of businesses to ensure export growth continues. “I have no doubt that a premium return can be expected from increasing support to exporters to expand in the fast growing emerging markets, particularly the BRIC economies – Brazil, Russia, India and China,” said Mr Whelan.
In the light of the Q3 export results and the heightened economic uncertainty, the IEA has revised downward its forecast for the full year export performance to a 5% growth level when compared to 2010. Mr Whelan noted that the 5% average comes from a merchandise growth of 3% and services growth of 7%. The IEA forecast made at the beginning of the year was for an overall growth in exports for 2011 of 7%.
Looking forward, the IEA says that prospects for further growth in 2012 have become much more uncertain. Mr Whelan noted that the International Monetary Fund was forecasting a slow down to 3.5% in global trade based on emerging economies growing trade at 6% and developed markets in the EU and US only growing by 2%. “The fact that the EU and the US markets currently account for over 80% of Irish export sales dramatically illustrates the need for a sustained and targeted approach to developing sales in the emerging markets, especially in the BRIC countries,” concluded Mr Whelan.