12.8% growth in Irish merchandise exports in the 3rd quarter of 2010

On releasing the Irish Exporters Association (IEA) 3rd Quarter 2010 Review, John Whelan, the Association’s CEOstated;

“Amongst the continued onslaught of negative coverage of the Irish economy, the Irish export effort continues to show the way out of the recession , with a very aggressive 12.8% growth in merchandise exports in the 3rd quarter , and continued good growth in services exports, bringing total exports for the quarter to €40.4 billion -up 9.3% on the same period last year”.

Exports accelerated across the 3rd quarter with merchandise exporters in particular gaining from a broadening out of the growth across most of our main trading markets internationally. The acceleration in export growth was assisted by the continued buoyancy in Global trade ( Ref; full Review document ), and the improvement in exchange rate competitiveness in the quarter.

John Whelan stated;

‘’The euro exchange rate with the Dollar in the July to September 2010 period averaged 10% lower than the same quarter in 2009. This helped Irish manufactured goods exports to the US rise by 32% in value, and reversed the losses in exports to that market over the last 2 years. This indicates clearly that Irish exports are now competitive into the US, provided the US Treasury does not re-enter the currency market to weaken the Dollar‘’.

He went on to say;

‘’The euro exchange rate with Sterling also improved during the quarter averaging 0.833 in the July – September of this year , compared to 0.870 in the 3rd quarter of 2009. This helped exports to the UK to rise by 4% in the quarter, which was particularly important to the indigenous sector who trade heavily to the UK market.The concern for the indigenous exporters is the return to weakness in Sterling in October, which if persistent will undo the claw back of markets from the 3rd quarter. The agri-food sector in total grew aggressively in the 3rd Quarter, with increased exports sales of 14%, which shows a wide geographic export expansion with exporters trying hard to reduce their reliance on the UK market.‘’

Merchandise exports in the 3rd Quarter of 2010 were €22,937 Million, up from €20,335 million from the same quarter in 2009. This is a 12.8% jump in merchandise exports and signals a rapid return to growth across most of our exports markets. Services exports after a very aggressive growth pattern for the first half of the year, eased back to a more modest 4.9% growth in the July to September period. Overall exports for the 3rd quarter were a buoyant €40.4 billion, which was an increase of just over 9% in exports sales over the same period last year.

Cumulatively the year to end September export picture has been improved significantly by the very strong 3rd quarter figures, and returns the total exports back to a very satisfactory 4% growth for the year to date. Services exports which surged ahead in the second quarter, returned to more modest growth in quarter three, but still maintained an impressive year to date growth of just under 7% for the year to end of September. Whereas Merchandise exports reversed from it’s loss in market share to a growth of 2% year to date.

Forecast for Full Year

Irelands improved international cost competitiveness and the continued growth in global markets, despite the signs of easing back from the very rapid expansion witnessed in the early part of the year, indicates that the year as a whole will be better than expected, and it is expected that we will have a relatively strong export sales finish to the year. Hence, the IEA has revised upwards its forecast for the year to €158.9 billion in total exports, a growth of 5.8% over the prior year.

The EU are forecasting an export growth for the EU 27 of 6.8% for the full year 2010, and a 6.9% export growth in 2011 (Ref table 2 attached). Irish exports could grow faster next year if the Budget 2011 is supportive of the export sector, and does not increase the cost of exporting from Ireland. The IEA Pre-Budget Submission outlines the key routes to export expansion that should be supported in the Budget.

The IEA remain concerned that the Bank of England may recommence its quantitative easing process again, and pull down the value of Sterling against the euro. Also there is some fears that the US Federal Reserve may also enter the market to weaken the value of the US dollar, as it tries to improve its trade balance and reduce its unemployment level. Either of these actions would severely undermine Irish export growth, and must be carefully monitored. The lack of contingency planning on the currency front by the Irish Government and the lack of export credit insurance are key concerns for Irish exporters, and could derail export growth plans.

Chief Executive, John Whelan stated;

“Despite the strong overall performance of Ireland exports, it is hard to overstate the difficulties faced by exporters in 2010, due to;

Volatile exchange rates
Reduced Trade finance for expansion
Withdrawal of Bank Bond guarantees by many of the banks
Invoice discounting cover with drawn form many markets
Export credit insurance difficulties

John Whelan, concluded by saying;

‘’There is clear evidence that exporters can drive their way out of this recession , and bring economic growth with it, but it is essential that the up coming Budget supports export growth , and does not increase the cost of doing business in Ireland.’’

FULL REPORT AND FURTHER INFORMATION