At Mid-Year Export Growth Targets for 2011 Are Bang on Target

Exporters in Ireland have been able to capitalize on the continued rapid global growth in demand for pharmaceuticals, agri-foods and information communication technology related products, which grew at over double the rate forecast by the World Trade Organisation (WTO).

Mr John Whelan, Chief Executive of the Irish Exporters Association (IEA)

Exports from Ireland in the first six months of this year grew by an impressive €6 billion or just under 8% according to the half-year export review from the Irish Exporters Association.  At a press conference in Dublin today the Association said that the figures are in line with its earlier full year projection that exports, including both merchandise and services, will grow to €177.5 billion or 9.1% higher than the figure for 2010 – a rate of growth substantially higher than the global average.

Speaking at the press conference to announce details of the half-year performance of the exporting sector Mr John Whelan, Chief Executive of the Irish Exporters Association (IEA) said that the impressive growth figures were achieved despite the many international economic shocks that occurred during the first half of the year.  “Shocks such as the disaster in Japan, unrest in the Middle East, currency volatility, sovereign debt, the banking crisis and oil spiking above $120 per barrel were just some of the problems experienced by exporters,” said Mr Whelan.  He added that exporters in Ireland have been able to capitalize on the continued rapid global growth in demand for pharmaceuticals, agri-foods and information communication technology related products, which grew at over double the rate forecast by the World Trade Organisation (WTO).

Ireland’s merchandise exports continued the strong growth trend established last year, and expanded by 7.4% in the first half of 2011.  The growth was driven by continued surge  in agri-food exports, which grew by 14.2%, much of this growth coming from sales in the Eurozone and to Asia.  The continued low value of sterling and the depressed UK market proved a strong incentive for exporters to move away from this their more traditional outlet.  The other major contributor to the merchandise sales growth was the chemical and pharmaceutical sector which also grew significantly  with export sales growth of  13.5% in the first six months, with approximately half of its exports going to the Eurozone, a quarter to the US, 10% to the UK and a further 15% to the rest of the world Rising global expenditure on healthcare by governments, particularly in emerging economies, is driving demand in the sector and Ireland is benefiting from the dominant global reach of multinational life science producers in Ireland.

Services exports were even more buoyant than merchandise exports in the first half of the year and grew by 8.3%.  The primary driver of the services export sector is computer services exports which grew by 11.4% to reach a six months export sales figure of €15.1 billion.  The other main provider of services exports was the business services companies that grew their sales by 6.9% to €11.2 billion with rapid growth in aircraft leasing, supply chain and foreign head office functions.  Services amounted to 45% of total exports in the first six months of the year, with strong growth expected to continue in the sector from continued expansion from firms such as HP, SAP, Google, eBay, AOL, IBM, Axa, Citi, Zurich, Allianz & Generali, as well as second tier players such as Gala Games, Stream Global Services, Salesforce.com and Service Source.

Regional Growth Mixed

Exports to the USA grew by 13.8% for the first six months giving a clear indication that the major US multinational sector exporting from Ireland continues to have a strong belief in the ability of their Irish operations to meet their home market demands.  Mr Whelan noted that this strong growth, despite a weakening dollar which fell some 6.8% against the euro during this period, is a strong indication that the US market has returned to sustained growth despite the talk of ‘double dip’ problems with the economy there.  Exports to the UK market, on the other hand, were very sluggish with a rise of only 2% in the value of exports in the first half of the year.  Mr Whelan said that growth was less than half the rate of UK inflation and also well below the 4.8% fall in the average value of sterling against the euro in the period which means that Irish exporters have either lost market share or profit margin or maybe both.

Within mainland Europe good export growth was achieved, with sales to France up by 20.6%, to Italy up by 14.6%, and to Germany by 9%. This was offset set by falls in exports to Spain down by 14.2% and Greece down by 9.1% as both economies continue to struggle to handle their sovereign debt and banking problems. 

Elsewhere, exports fell by 4% to Japan in the aftermath of their earthquake and nuclear disaster and, unexpectedly, exports to China fell by 1%, the first fall in over a decade.

Forecast for Full Year 2011
John Whelan summed up the forecast for the full year when he said: “We expect continued growth despite constants shocks.”  The IEA believes the short term outlook for the rest of the year is challenged by constant shocks as the result of debt problems in a number of Eurozone countries and the concerns associated with deficit funding in many of the OECD economies.  “There is no doubt that these issues may impact on growth, but they are being offset by continued rapid growth in emerging economies,” said Mr Whelan.  He noted that the competiveness of Irish exporters is improving through tough internal measures and a fall in the external business costs including energy, office rents and construction services.  He said that the IEA believes that the new Government has made a positive start in restoring confidence and there is strong evidence that Foreign Direct Investment has not been affected by the negative sovereign debt issues.

In making its forecast for the full year all of above factors combine to indicate a strong second half of the year export growth.  For the full year the IEA forecasts total exports of €177.5 billion, a growth of 9.1%, or €14.8 billion in added export sales over the previous year.  Of this total, merchandise exports are expected to contribute an added €8.9 billion, a rise of 10% and the services exports is forecast to rise by 8% or €5.8 billion.  “We are confident that the export growth rates expected in Ireland will significantly exceed the global average in 2011,” said Mr Whelan.  

In conclusion, Mr Whelan said that Irish exporters have shown that despite difficult trading conditions in many parts of the world that they are continuing to grow their exports at a rate faster than the international average.  “The Irish Exporters Association remains confident that exports and exporters will continue to lead the way out of Ireland’s economic woes.”

Please click here to read full review on IEA website

For Further Information:        

John Whelan,  Chief Executive – Irish Exporters Association,  Tel: 087 927 1243