The Irish Exporters Association (IEA), today (Wednesday 1^st August  2012) published its Half Year Export Industry Review 2012.

Launching the report, John Whelan, chief executive of the IEA, emphasised the urgent need to support our manufacturing exporters in these difficult times for the sector as the Eurozone crises intensifies and threatens to derail Irish export recovery.

‘’The failure by the EU heads of state to resolve the Eurozone crises is creating excessive uncertainty amongst businesses and consumers, not only  here in Europe but also in the  two largest global economies of   the USA and China. The impact on Irish  merchandise exports is extensive with exports to the Eurozone contracting by 5%  in the first six months of the year, effectively de-railing the  recovery of the many indigenous manufacturing exporters to the region’’.

The IEA chief executive also indicated that Ireland’s over dependency on Pharma exports to the United States was coming home to roost.

‘’Exports to Ireland’s  number one export market has taken a severe downturn as the full impact of the end of patent protection has hit pharmaceutical exports to the US in the first half of year. However, patent protection is by market, hence the impact will vary according to the export country destination. Exports to the USA were mostly impacted as the early patent registrations were made there and hence the patent  protection has come to an end earliest there. The pharmaceutical exports to the USA fell by 30% in the first half of 2012, but exports to  the EU continued their long term trend growth of 6%. The industry has been calling for more stream lined approval processes, particularly within the EU, to enable a lower cost in the development and market launching of new medicines onto the market,’’ said Whelan.

Good news , however in the IEA report  for exporters to the  UK, where the  favourable  exchange rate  was acting as a boost to exports with  exports to the UK  returning to growth on the back of a weaker  Euro.

“The falling value of the euro against sterling has given a welcome boost to exports into the UK  market ,which grew by 15% in the first half of the year.  The export gains came from pharmaceutical  & chemical exports  which grew by 33%  and from the  9% increase in exports of computer equipment. Agri-food exports held their own, with exports values at the same level as for the first six months of 2011,” said John Whelan.

The report also highlighted the developing opportunities still to be tackled in the BRICS and commented on the disappointing figures on exports to the BRICS fast growing emerging markets which fell by 5% in the first half of the year.

‘’The slow roll out of real support measures to support the expanded working capital finance requirements for these distant fast growing markets is not helping --for example the  Partial Credit Loan guarantee scheme  agreed  by Government this time last year as a necessary support mechanism to support 1600 medium sized business  to expand and grow in these higher risk market , has not yet been rolled out to industry.

A  re-allocation  of the Irish Government  trade promotional agencies and embassy staffing is urgently needed to support  Irish export industries efforts in expanding in to these fast  growing, but distant and difficulty to enter markets --for example  the  recent closing the EI office in Guangzhou  has to be seen as a retrograde  support  move‘’.

Finally commenting on the upbeat results for services exports which grew by a very impressive  11% in the first half of the year, the IEA chief executive said:

‘’The  commercial  services sector in Ireland continues to develop as a major player in the global  market place. Last  year commercial services exports from Ireland  grew by  over 9% , and in the process our share of the global market  rose  from 13^th largest services exporter to 12^th  largest according to the WTO annual report .This strong growth continued into the current year , with growth of 11% in services exports for the first six months of the year . The Computer services sector dominates the export volume accounting for41% of the total, closely followed by the Business services (head office management  services ,  air craft leasing , consultancy and research and development ) which accounts for 28%.

This tremendous performance by the services export sector is a clear indication of the return to competitiveness in export industry ,  and the ability of Irish based businesses to expand market share, once the playing field is kept level ’.’

 

The Review also gave a revised Forecast of the Prospects for exports in  2012 and 2013 ;

€ Million	2011 Jan- Dec	2012 Jan -Dec	Diff €	% Change
Merchandise	92,544	90,000	-2,544	-2.8%
Services	73,837	86,000	12,163	+14.0%
TOTAL	171,268	176,000	4,732	+2.7%

Source; CSO and IEA 

2012  Forecast

·       Merchandise Exports contraction of 2.8%

·       Services   Export growth of 14.0%

·       Total Export growth of  2.7%

2013 Forecast

·        Merchandise Exports growth of 2%

·        Services Export growth of 8%

·        Total export growth of 5%

The outlook for Irish exports darkened in recent months as the euro sovereign debt crisis threatens to undermine global growth. The IMF Troika agreement on a debt restructuring plan for Greece is still uncertain , and the Spanish banking crises has now engulfed the sovereign in that country .The ongoing uncertainty  being  created by the EU political leaders in their approach to resolving the banking debt crises and the related sovereign debt crises has undermined the whole EU member states ability to emerge from the   current recession .  Ireland is no exception and is  certainly being  adversely affected by falling import demand in the European Union, which is the single largest market for our exports.

In view of these circumstances , the IEA  are forecasting a contraction  in merchandise trade export  growth of 3% in 2012, with a return  to growth of  2.0%  in export value   anticipated for 2013. However , Services  exports are expected to grow very robustly by 14% in 2012 , with a moderation to 8% growth in 2013 .Hence , the IEA anticipate an overall export growth of 2.7% in 2012 , with a further increase of 4.9% in 2013 .

Figures for 2013 are provisional estimates based on assumptions about the longer term trajectory of gross domestic product (GDP, total production in a country) and should be interpreted with an appropriate degree of caution. World trade volume for that year is expected to recover to 5.6%. Exports of developed and developing economies should increase by 4% and 7%, respectively. On the import side, developed economies should record growth of 4% while developing economies should advance 8%.

Overall, risks to the current forecast are firmly on the downside. A deeper recession in the euro area would cast doubt on the ability and willingness of countries to service their debts. This would drive up borrowing costs for countries with challenging finances and reinforce any downturn.

Volatile commodity prices also constitute a risk factor, as will higher oil prices . However, buoyant prices also boost the export earnings of primary producing countries , which are mainly  emerging and developing economies.

Finally, global political risks and natural disasters are always a possibility, although their timing and location is inherently unpredictable.

END


For the full report click here  /x/YEAR_2012__HALF_YEAR_IEA_REVIEW_of_Export_Industry.pdf

For Further information  contact ;

John F. Whelan

087 9271243  or 01 6612182

johnwhelan@irishexporters.ie

Or Ashley Beston

ashleybeston@irishexporters.ie