Exports from the Republic lagged the EU and the rest of the world as high costs hit competitiveness in 2005, figures released yesterday show.
The Irish Exporters' Association (IEA) said that despite favourable world trade conditions, sales of goods and services from the Republic to other countries increased by only 3 per cent.
Chief executive John Whelan said this performance was against a background of an 8 per cent growth in world trade in 2005. He added that it also compared unfavourably with the double digit growth regularly achieved by Irish exporters over the last decade.
"The only export sector to show significant growth was the pharmaceutical/chemical sector, which increased exports by 8 per cent," he said.
"Most other manufacturing sectors were at or below the rate of inflation increase."
Overall, manufacturing exports grew by just 2.5 per cent, compared with an EU average of 9 per cent for industrial exports for all member states.
Mr Whelan said strong economic growth and low unemployment was masking the fact that the Republic's wealth-creating industries were rapidly losing competitiveness.
"There's a very high risk that the Government has taken its eye off the ball in terms of the problems that exporters are facing," he said.
Mr Whelan warned that in the next round of partnership talks involving the Government, trade unions and employers, every effort must be made to keep the lid on excessive pay rises.
He said that while the majority of private sector workers were not unionised, pay increases agreed in the talks still tended to set minimum levels for business.
Mr Whelan also pointed out that the talks had implications for the cost of waste management, energy, health and education, all of which have risen by about 20 per cent over the past three years. "There is every indication that if that is not tackled very aggressively, inflation will continue," he said.
Mr Whelan said there was evidence in the association's figures of a continuing decline in competitiveness. Exports to the US, the Republic's biggest market, stayed static at €16.5 billion. This was despite the fact that the euro dropped by 13 per cent against the dollar during the year.
Sales to the second biggest market, the UK, which is the most important from the point of view of small and medium-sized industry, dropped 2.8 per cent to €14.4 billion from €14.8 billion. This out-turn occurred against the background of a 4 per cent fall in the euro against the pound in 2005.
Mr Whelan said that, along with tackling costs, smaller-scale exporters needed assistance with introducing greater automation and with identifying potential areas within their businesses for research and development.
He argued that the Republic's economy could only keep developing if it had a healthy export sector, and warned that debt-finance and growth in consumption and construction could not continue indefinitely.
