Current account deficit of €1bn in first quarter
BALANCE OF PAYMENTS:PAYMENTS OUT of the Irish economy exceeded earnings from abroad in the first three months of the year, according to CSO figures.
The current account of the balance of payments had a deficit of just over €1 billion in the first quarter of 2012 (see chart 2). It was the first quarterly deficit in a year.
The figures are not adjusted to take account of seasonal factors, meaning they tend to be volatile.
There are three main components to the current account of the balance of payments: services; tangible goods; and earnings on investments.
The balance of payments figures provide a unique insight into the internationally-traded services sector, important in an Irish context as the economy is one of the largest services exporters and importers in the world.
In the first three months of 2012, services exports generated just over €21.1 billion in earnings from abroad (see chart 3). This represented a decline of €0.5 billion on the final three months of 2011.
As the chart shows, computer services are the largest single earner. They generated €8.6 billion in earnings from abroad in the first quarter. This was a decline on the all-time high recorded at the end of 2011, but still the second highest quarterly figure on record.
Business services are the second largest services export earner. They also fell back from the final quarter’s record high. In the first quarter of this year, they generated €5.9 billion.
Insurance services generated €2.1 billion in foreign revenue in the January-March period, up more than €300 million. However, insurance services have not been showing any trend growth since the middle of the last decade.
The trend in financial services exports has been different again. Export revenues fell sharply as the financial crisis took hold in 2007. In the first quarter of this year. financial services exports saw €1.8 billion in foreign earnings.
Ireland also imports an unusually large quantity of services.
In the first quarter of 2011, the services import bill was just below the total for exports, at €21 billion.
Exports of goods generated earnings of €21.8 billion in the first three months. This was an increase of almost €800 million on the previous period. It was the highest quarterly figure since 2005.
Irish residents paid out €13.5 billion for imports of goods, a large €1.5 billion quarter-on-quarter rise. It was the largest quarterly figure for goods imports since the recession took hold in 2008.
Irish residents earned €14.2 billion on their foreign assets in the first quarter, almost unchanged on the previous quarter.
Foreigners earned €22.9 billion on their Irish assets in the same period – more than €1 billion higher than the previous quarter and the highest figure since 2008.