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Press ReleaseExport Growth is expected to decelerate strongly in 2012, states the Irish Exporters Association (IEA) at the release of its Export Industry Review for the first quarter of 2012.
Economic turmoil in the Eurozone economies prevented any real growth in merchandise export growth in the first three months of the year.
However services exports driven by continued strong foreign direct investment (FDI), grew strongly in the first quarter.
Hence, in the first quarter total exports of goods and services grew by 3.6%, which is well below the level required to yield the expected jobs growth expected from the sector this year.
John Whelan, chief executive of the IEA, stated at the release of the Review:
"The return to recession in the Eurozone which accounts for 39% of our goods exports and 35% of services exports, has impacted on our exports in the first three months of the year. The turmoil in the Eurozone economies will have a severe impact on our ability to expand exports over the next three quarters of 2012. It is imperative to that Ireland gives a YES vote to support the stability of it’s customers in the single EU market, but we also need an EU wide stimulus to get economic activity growing again."
The IEA chief executive went on to say:
"The concern is that the Eurozone economic crises will spill over to the US and damage a sustained recovery in the US economy which accounts for 23% of our goods exports and 7% of services exports."
He further stated:
"New export sales from foreign direct investment( FDI) was a major driver last year and the trend continued in the first quarter of 2012 . The bulk of new investment in export businesses in Ireland this year and for the foreseeable future is expected to come from abroad and should shield Ireland against a full scale recession in our exports"
The IEA’s first quarter Review also had some good news concerning the major market for indigenous Irish exporters:
- There was a welcome, if unexpected return to growth in Irish exports to the UK which rose by 19% in the first quarter. The growth was undoubtedly assisted by a weakening of the euro, return to jobs growth in the UK and continued improvement in Irish business competitiveness. However, the rapid rise in diesel and other heavy fuels in recent months is taking its toll on the costs of getting goods to market and will inevitably act as a drag on manufacturing exports .
The IEA Review went on to highlight added good growth arising in some of the fast growing emerging global markets;
Table A. Total Exports Jan/ March 2012
|€ Million||2012 -Q 1||2011- Q1||Change||% Change|
Source; CSO and IEA.
Forecast for full year 2012—Outlook has deteriorated.
John Whelan stated that the IEA continues to maintain its low growth forecast for the full year:
"Governments, businesses and households across Europe and in particular in the Eurozone countries ,continue to reduce their debt burdens to more manageable levels, but this process of deleveraging (reducing reliance on debt) and fiscal consolidation (reducing budget deficits) is likely to take years. In the meantime, Ireland may have to resign itself to a long period of slower-than-average growth in international trade."
The IEA therefore continues with the start of year forecast of a very small growth of just over 1% in goods exports and 6% growth in services exports, giving a full year export growth of 3% in total.
Mr Whelan commenting on the low forecast stated ;
"Growth of this magnitude will inevitably result in much lower job creation from the export sector this year, which was expected to yield 30,000 jobs directly and a similar number indirectly in the wider economy under the Trade and Investment towards 2015 strategy."
Table B; Full year 2012 Forecast:
|Diff €||% Change|
Source IEA and CSO
Mr Whelan concluded by advocating actions to elevate the falling export prospects in our traditional European markets "One way to escape the impact of a recession ridden Europe is to aggressively focusing our export promotional effort on the fast growing emerging markets, not just the BRIC economies, but also on fast growing African markets, middle eastern and South American markets. Such an approach would, in the longer term, ensure a more sustainable high level of export growth and with it more rapid jobs growth and a buoyant economy."
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