Irish exports slump 6% in 2023 amid global trade slowdown

The value of Irish exports declined 6 per cent in the first nine months of the year, the Central Statistics Office (CSO) has said, against the backdrop of a broader global slowdown in trade brought about by rising interest rates and declining consumer demand.

In September the Republic exported €16 billion worth of goods around the world, down €3.5 billion or 18 per cent compared with September 2022, according to the CSO. Goods exports have fallen by a total of €9.7 billion over the first nine months of the year, a 6 per cent drop-off from the same period of last year with a notable 15 per cent decline in exports to the US.

Total exports to Britain fell by 16 per cent to €1.2 billion in September compared with September 2022 but increased by 8 per cent in the first nine months of the year.

The general slump was particularly pronounced within certain sectors of the economy. Amid a sharp correction in the pharmaceutical sector in the context of falling global demand for Covid-19 vaccines, organic chemicals exports slumped by almost €1.6 billion or 37 per cent to around €2.6 billion in September compared with September 2022. That drop in pharmaceutical exports has been blamed in part for the slump in Ireland’s corporation tax receipts since the summer.

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Exports of medical and pharmaceutical products – which accounted for almost 40 per cent of the Republic’s total exports in the month – declined by €558 million year-on-year, a 9 per cent drop-off.

Carol Lynch, partner in BDO Ireland’s customs and international trade services department, said the decline in pharma exports was not entirely unexpected. “This shift is indicative of the world gradually moving beyond the peak of the pandemic, leading to a downturn in the production and export of these specific chemicals back to a more normal level. On the other side we are seeing significant recent investment in new projects in this area and the leading companies announcing new investments in Ireland, which is positive news for future growth.”

Exports of electrical goods and machinery also declined sharply over the period, falling 45 per cent in the 12 months to the end of September. Ms Lynch said this category of goods was “more complex” and reflected broader geopolitical trends.

She said: “This area covers semiconductors and chips, and is heavily influenced by the current geopolitical tensions with China. We’ve seen a significant reduction in exports to China, particularly in this sector, which is a cornerstone of our IT industry. This decline can be attributed to the heightened geopolitical tensions and growing concerns regarding the export of high-tech equipment to China.”

The value of imports, meanwhile, has also declined year-on-year, falling by €1.8 billion to €11 billion in September.

The World Trade Organisation recently halved its forecast for global trade growth this year in response to rising interest rates that have dented consumer spending power in Europe, the US and Asia.

The trade body said persistently high inflation coupled with the sharp rise in borrowing costs over the past year as central banks have sought to limit price pressures have combined to erode consumer purchasing power in some of the world’s largest economies.