Trade surplus narrows as imports up 12% in June

IRELAND’S TRADE surplus narrowed in June as exports fell and imports rose 12 per cent, according to figures from the Central Statistics Office (CSO).

The CSO said seasonally adjusted exports decreased by 5 per cent between May and June to €7.3 billion, while imports were just under €4.1 billion, resulting in a trade surplus of €3.2 billion.

In the first five months of the year, export receipts stood at €35.9 billion. Organic chemicals exports in the January-May period declined by 11 per cent over the same period in 2009, to stand at €985 million.

Computer equipment exports fell 41 per cent, or €1.1 billion, compared with the same period last year, and medical and pharmaceutical products recorded a rise of 14 per cent, an increase of €1.1 billion.

Belgium, Britain and the US accounted for more than half of all exports in the five-month period.

Imports rose by some €1.4 billion to €18.6 billion in the same period, a 7 per cent rise. Imports of computer equipment were down 50 per cent, or €944 million, while other transport equipment, including aircraft, fell by 38 per cent.

The economy imported 22 per cent less from the US, and imports from China were also down, falling 27 per cent or €335 million.

However, imports from Norway and Switzerland rose by €181 million and €291 million respectively.

Chief economist with Bloxham Stockbrokers Alan McQuaid said the figures were positive but still disappointing.

“The 2010 outlook for merchandise exports depends heavily upon the strength of the recovery in external demand as well as the external market share that Irish exporters are able to capture.

“The worrying sign now is that the US economy appears to be slowing down sharply, and while we still think it will avoid a double-dip recession, the fall in demand and activity is likely to have negative implications for Irish exports in the coming months,” he said.

“The most recent surveys show that export orders, which boosted the Irish economy in the first quarter, have begun to slow in both the services and manufacturing sectors over the last number of months, but domestic activity is picking up the slack.

“But it is hard to see domestic demand holding up if fears about the weakening health of the US economy intensify,” he said.

In a note to clients, Davy analyst Aidan Corcoran described the drop in the trade surplus as “disappointing” but noted the surplus had increased since the beginning of the year.

The Davy note also cautioned the “volatility of monthly data makes extrapolation hazardous”.

Mr Corcoran noted Ireland’s terms of trade, the ratio of the export price index to the import index, has strengthened since the start of the year.