THE IRISH economy as a whole ran a payments deficit with the rest of the world of just under € 500 million in the second quarter of the year. The figures, published yesterday by the Central Statistics Office, suggest a continued trend towards a narrowing deficit. This is usually a sign of improved competitiveness.
Included in the balance of payments are figures for the important services export sector. In the second quarter of the year, sales of services to the rest of the world continued to grow strongly, to stand at just under € 20 billion. This was the highest quarterly figure for services exports ever recorded.
The largest single services export – those of computer services – accounted for the lion’s share of the growth. They surged in the second quarter to reach €8.4 billion. This was also an all-time high.
The second-largest category is business services. They registered their second consecutive quarter- on-quarter decline in the April-June period to stand at €5.1 billion. The decline in the first half of 2011 is likely to reflect a slowing global economy.
The important tourism sector earned just under €1 billion in foreign receipts in the second quarter, representing an increase of almost one-fifth on the same period in 2010. The balance of payments includes not only receipts and payments on goods and services exports/imports, but also income earned abroad by Irish residents and income foreigners earn in Ireland. This is overwhelmingly accounted for by returns on investments.
In the second quarter, Irish residents earned €14.3 billion on their foreign investments. This was up on the first quarter when the figure stood at €13.6 billion.
Historically, foreigners have earned considerably more on their Irish investments. This partly reflects the large amount of highly profitably foreign direct investment in Ireland and the tendency of multinational companies to book as much of their international profits in Ireland to take advantage of the State’s low corporation tax rate of 12.5 per cent.
In the second quarter of the year, foreigners’ total income on their Irish investments stood at €22.7 billion, up from €21.5 billion in the first quarter.
