Exports predicted to rise 1% this year to €155bn

 

IRISH EXPORTS are forecast to rise by 1 per cent to €155 billion this year, according to a new report that shows exporters have returned to growth.

The Irish Exporters Association’s half-year review reveals that merchandise exports showed a return to growth of just under 2 per cent, which the association called “a remarkable performance given the current economic climate”.

The news came on the same day that data on economic activity suggested the euro zone may have pulled out of recession.

Euro zone services business grew for the first time in 16 months in September and factory output increased for the second month running.

Markit’s euro zone Flash Services Purchasing Managers Index, compiled from surveys of about 2,000 companies, climbed to 50.6 in September from 49.9 in August, its highest level since May 2008 and ahead of expectations for a rise to 50.5.

“It’s a welcome sign, a broadening of the upturn. The manufacturing sector had seen the biggest bounceback and has now been joined by services,” said Chris Williamson at data firm Markit.

The reading, ahead of the 50.0 mark that divides growth from contraction, should reassure the European Central Bank that its loose monetary policies are working and help cement economists’ views that the worst of the recession is now past.

The euro zone flash manufacturing index completely missed expectations for 49.7 by coming in at 49.0, but this was up from 48.2 in August and its highest reading since June 2008.

New orders for industrial goods rose by 2.6 per cent in the euro zone in July, according to Eurostat figures released yesterday.

However, Ireland recorded the largest decreases in orders, the new data reveals.

In July new orders for durable consumer goods increased by 5.6 per cent in the euro zone and by 6.9 per cent in the full EU.

The Irish Exporters Association is forecasting that merchandise exports will increase by 2 per cent this year, with service exports falling by 1 per cent. Taken together, this would see total Irish exports rising by 1 per cent to €155 billion for 2009.

Service exports fell by 5 per cent for the first half of 2009, which the association said was better than expected. It said exports were boosted by a 6 per cent increase in the business services sector, which accounts for 34 per cent of services exports.

By contrast, the insurance sector fell by 16 per cent and financial services exports by 16 per cent.

The association’s chief executive John Whelan said that while the latest figures are encouraging given the recession, they mask a major problem which is affecting Ireland’s traditional export sector.

“The bulk of growth in merchandise exports for the first-half of the year has come from companies, multinational in the main, in the life-sciences sector which includes pharmaceuticals, chemicals and medical devices,” he said. – (Additional reporting: Reuters)