Trade surplus fell sharply in June

The Republic's trade surplus with the rest of the world fell sharply in June, as both imports and exports declined significantly. Exports exceeded imports by €2.48 billion over the month, the lowest trade surplus for almost two years, according to seasonally-adjusted figures released by the Central Statistics Office (CSO) yesterday.

This compares to a surplus of €3.84 billion in May and €3.3 billion in June a year previously, with the decline largely attributable to a generally weaker economic situation, as well as volatility within the chemicals and machinery sectors.

Preliminary indications for July suggest a pick-up, however, with the CSO forecasting a trade surplus of €3.24 billion for the month, based on a 2 per cent increase in imports and growth of 13 per cent in exports.

Even with the July forecast, Mr Alan McQuaid, chief economist with Bloxham Stockbrokers was disappointed by the trade figures, having expected a much more "bullish" trend.

"There doesn't seem to be enough momentum on the domestic side," Mr McQuaid said.

He acknowledged, however, that the overall trend in external trade was reasonably positive, particularly when monthly swings were excluded.

AIB Group Treasury chief economist, Mr John Beggs, said that the statistics proved how dependent the Republic's economy had become on the chemicals business.

Taking the first half of 2002 as a whole, exports of medical and pharmaceutical products grew by 78 per cent to €7.2 billion, while exports of organic chemicals increased by 9 per cent to €9.8 billion. Exports of machinery declined by 10 per cent to €4.6 billion.

Mr Beggs said that when trade in chemicals and machinery were stripped out of the numbers, a picture of harsh domestic trading conditions emerged, with most sectors seeing little growth in trade.

Growth was flat on the import side in the first half, with goods worth a total of €29.6 million imported. The most significant expansion came in organic chemicals, where imports grew by 49 per cent to €1.2 billion.