Export Industry Half Year Review by the Irish Exporters Association

Irish Services Exports Continue to Expand Rapidly – Agri-Food & Drink Export Sectors Showing Return to Growth

The Irish Exporters Association (IEA) released its 2010 Half Year Review of Export Industry which highlights substantial growth in the services sector and encouraging signs that the agri-food and drink sectors are beginning to expand their exports again. The Association, however, advises that despite these encouraging results the translation into additional jobs may not occur until some time in 2011.

According to Mr John Whelan, Chief Executive of the IEA, the encouraging signs are indeed welcome, but there were still a number of obstacles to be overcome before these green shoots turn into real, sustainable export-led growth for the Irish economy. Mr. Whelan bases much of his cautious optimism on the return to rapid growth in global trade that has been evident for the first half of 2010. He noted that despite global financial stability concerns the first quarter report of the World Trade Organisation (WTO) said that world merchandise trade grew very rapidly in the first quarter increasing by some 25% over the same period in 2009 with Asian markets leading the way with exports up 34% and an imports growth of 45%. “Figures for Services Exports are not yet available, but normally services trade grows somewhat slower than that of merchandise trade. It is against this background that we need to view the Irish export performance,” said Mr Whelan.

Irish merchandise exports
Irish merchandise exports in the second quarter of 2010 were up 5% or just over €1 billion compared to the first quarter of the year. “This represents the first quarterly growth in merchandise exports recorded since the beginning of 2009, and indicates we may now have reached the turning point in the decline in Irish merchandise exports brought on by the global financial crisis,” said Mr Whelan. He quickly pointed out that this encouraging quarter on quarter increase has to be seen in the context that the figure for the half-year is still 4% less than the same period in 2009. “Undoubtedly this means that Irish merchandise exporters have been loosing international market share and it becomes perfectly clear that as a country we must continue to maintain our focus on restoring cost competitiveness.”

Mr Whelan noted that the Irish agri-food sector returned to growth during the second quarter of this year helped by a global increase in commodities prices. The half year figures are up by just under 3% over the same period in 2009 but still 10% below the 2008 comparable half year figures. Mr Whelan said that the Irish Exporters Association believes that there is clear evidence of a very positive trend developing. Especially encouraging is the even greater return to growth in the beverages sector which increased by 13% in the first 6 months of the year compared to the prior year. Exports from the beverages sector are currently, running just 1% below the first half figures of 2008. . Exchange rate developments have also been assisting Irish exports to both the UK and the US, with a euro decline of 8% against Sterling and 16.5% against the Dollar in the first 6 months of the year. “This level of exchange rates, should they remain, will undoubtedly continue help merchandise exports to recover lost business,” said Mr Whelan.

Services Sector Leads the Way
The rapid return to growth in global markets was particularly evident in the stellar performance of the Irish Services exports sector which continued its very strong growth pattern and rose by €2.2 billion to €34.6 billion in the first half of this year. In its recent publication on commercial services the WTO reported that for 2009 Ireland was ranked as the 9th largest commercial services exporting nation, up from 11th position in 2008. “This sort of rise up the rankings is a clear indication of the increasing share of global services trade being won by Irish-based companies. This recognition underlines the strength of our internationally trading services sector and offers very positive indicators of Ireland’s potential to be a global leader in this sector,” Mr Whelan noted. Services now account for 45% of total Irish exports and, if current trends continue, Services Exports are likely to exceed merchandise exports for the first time ever next year. However, he was very concerned that from a national strategy point of view only 3.5% of Ireland’s services exports come from Enterprise Ireland clients, who are the main target of State assistance. As over 90% of Irish businesses are services companies, the indications are that very few have ventured into international markets. The IEA have proposed to Minister Batt O Keeffe , a means of offering a wider incentive to all services companies with the potential to enter international markets through a ‘’Export Outreach Voucher Scheme’’. John Whelan concluded ‘’as the economy recovers from the worst recession for 80 years, it faces a range of challenges that require ambitious policy responses and novel type of incentives. Many services companies who have only traded on the home market are now struggling, and shedding jobs ; with the right assistance into international markets, they could be critical drivers of growth and job creation’’..

Overall Outlook
Mr Whelan noted that overall the first half performance of Irish exporters has been mixed with some merchandise sectors experiencing modest increase in international sales and with companies providing internationally traded services continuing to lead the way. “The Irish Exporters Association believes that the combined Irish exports of goods and services will show positive growth by some 3.4% for the full year 2010,” said Mr Whelan. He added that should the growth in world trade continue for 2011 and providing that Ireland can maintain its momentum in restoring lost competitiveness that the resultant increase in exports should lead to the creation of 24,000 additional jobs during 2011.

Mr Whelan noted that overall the first half performance of Irish exporters has been mixed with some merchandise sectors experiencing modest increase in international sales and with companies providing internationally traded services continuing to lead the way. “The Irish Exporters Association believes that the combined Irish exports of goods and services will show positive growth by some 3.4% for the full year 2010,” said Mr Whelan. He added that should the growth in world trade continue for 2011 and providing that Ireland can maintain its momentum in restoring lost competitiveness that the resultant increase in exports should lead to the creation of 24,000 additional jobs during 2011.

For a full report you can visit Irish Exporters Association website.