HSBC forecasts annual export growth of 6% for Ireland

The Irish economy is expected to return to a sustained upward trend this year, according to HSBC, as improvements in price competitiveness and European demand feed through to higher export growth.

While Ireland experienced a sharp fall-off in net exports last year as a result of the pharma patent cliff, HSBC, a bank and financial services company, is forecasting annual export growth of 6 per cent per year.

HSBC Ireland head of corporate banking Alan Duffy said improving economies in the US and euro zone, along with the substantial improvement in Irish unit labour costs over the last few years, should see exports soon return to annual growth of around 6 per cent a year.

He said trade conditions were expected to improve “substantially over the coming six months”, reflecting the end of the recession in the euro zone and established recoveries in the US and Britain.

“The euro zone now looks like it has sustainably exited recession which should remove some of the drag on Ireland’s trade sector going forward.”

In its bi-annual trade forecast, HSBC said the chemicals sector continues to dominate the export outlook for Ireland. It is expected to account for around half of foreign sales over the next few years. High-tech exports from Ireland are also expected to grow, rising from around 9 per cent currently to 12 per cent by 2030.

According to the forecast, the most dynamic emerging market for Irish exports is expected to be China.

“Although the rich developed markets will continue to offer the best opportunities for Ireland’s exporters in the near-term, fast-growing demand from emerging markets will becoming increasingly significant over time,” Mr Duffy said.

HSBC’s Trade Confidence Index edged up one point globally from six months ago to reach 113 in the second half of 2013.

This improvement was led by growing confidence in the near-term outlook amongst key industrialised nations such as the UK and US.

In contrast, businesses in the emerging markets of Latin America and the Middle East reported a slight drop in trade optimism from six months ago, while Asian confidence remained unchanged.

Ireland showed positive results, with its trade confidence index well above the neutral mark of 100 at 117. The majority of survey respondents – 65 per cent – expect trade volumes to increase over the next six months.

Over 60 per cent cited Europe as the market with the best growth opportunities in the near-term, reflecting the brightening outlook for the euro zone which is expected to return to sustained growth this year.