Irish companies supported by Enterprise Ireland saw their exports increase by 7.2 per cent last year, bucking the trend of earlier years and surpassing export growth from other European states.

According to the State agency's annual report, exports grew by €1.28 billion in 2005, bringing the total for the year to €10.7 billion. This compares with growth of 5.4 per cent in UK exports and 6.9 per cent in Finland, a country with which Ireland is often compared.

"What has been achieved by Irish companies is remarkable," said Frank Ryan, the group's chief executive. "2005 was a very good year for Irish businesses exporting and the turnaround has been successfully built upon."

The Minister for Enterprise, Trade and Employment, Micheál Martin, welcomed the findings, saying the figures were "very, very impressive" and augured well for the future of the economy.

Enterprise Ireland, which is charged with developing indigenous companies seeking to export overseas, attributed the growth to increased investment in research and development (R&D). Mr Martin said the recent trade missions by industry and Government to places including China had benefited Irish companies considerably.

During 2005, northern Europe held its position as the largest recipient of Irish exports, receiving €6.2 billion worth of goods, up 6.4 per cent on the prior year. Within this region, the UK remained the largest export market, receiving €4.8 billion.

Exports to the US rose by 13.6 per cent, while the largest growth was seen in Asia, where exports increased by 14.6 per cent.

On a sectoral basis, the strongest growth was seen in the software, services and emerging industries, where exports grew by 9.1 per cent to €1.5 billion. Industrial and life sciences grew 8.5 per cent to €2.2 billion, while food and retail held onto its position as the largest export sector, achieving €7 billion in exports, up 6.4 per cent.

"It has been a very challenging but very successful year," said Patrick Molloy, chairman of Enterprise Ireland. He said the group, which employs 950 people in 33 offices around the world, had achieved or exceeded all the targets it set out in its strategy plan - Transforming Irish Industry 2005-2007.

During 2005, the number of Irish firms spending more than €100,000 on R&D reached 515, close to the group's target of 596 by the end of 2007, while the number investing more than €2 million stood at 33, compared with the target of 42 by 2007.

Mr Ryan said he was disappointed that 734 jobs were lost during the year, although he pointed out that this was less than in prior years and said that he hoped none would be lost in 2006.

During the year, 75 new firms were set up with the agency's help, while it supported 167 significant investment projects, 103 of which were outside Dublin.

Mr Ryan said the positive momentum from last year had continued in 2006.