Recovering exports drive trade surplus higher

Rising exports drove Ireland’s trade surplus higher in February, as the impact of the pharma patent cliff continued to subside.

According to statistics from the Central Statistics Office (CSO), exports rose by 1 per cent on a seasonally adjusted basis to € 7.2 billion in February, pushing the trade surplus up by 4 per cent to € 3.2billion.

Exports rose by € 57 million, or 1 per cent, to € 7.2 billion in February from January. In the three months to February,goods exports were up 6.6 per cent year-on-year – the fastest pace of growth since September 2012.

On an annual basis, the value of exports increased by € 168 million or 3 per cent in the twelve months to February 2013, to € 6.8 billion, driven by a 15 per cent jump in the exports of food and live animals; a 14 per cent increase in essential oils and 4 per cent growth in the exports of organic chemicals.

David McNamara, economist with Davy Stockbrokers, said that exports should add to GDP growth in the first quarter, following the sharp dip at the end of 2013.

Last year, exports rose by just 0.3 per cent, dragged down by a 5.2 per cent fall in exports largely attributable to the pharma patent cliff, as drugs produced by Irish-based pharma companies came off patent, but also by weak demand for non-pharma goods.

However, Mr McNamara said that the latest data provides “tentative evidence that a broader range of sectors is now adding to a tentative recovery in exports”.

“Exports are not only benefitting from less of a drag from the pharma sector but also from improved demand in Ireland’s main export markets in Europe,” he said.

The EU accounted for 55 per cent of exports in February, followed by the US which accounted for almost a quarter (22%) of total exports that month.

Alan McQuaid, economist with Merrion Stockbrokers, is forecasting a recovery in export performance this year, "on the basis of stronger global demand", and is looking to a volume increase in goods and services this year of 3.0 per cent, with a 5per cent plus increase on the cards for services.

Imports fell off from January to February, declining by 1.7 per cent, but on an annual basis, the value of imports rose by € 109 million (+3%) to € 4.0 billion.