Irish manufacturing and agri-food exports slumped in the first half of this year as the Eurozone crises deepened but services exports surge to maintain overall growth in first half of 2012.
That's according to the Irish Exporters Association (IEA) Half Year Export Industry Review 2012 published today, with the organisation's chief executive, John Whelan, saying that Ireland's over-dependency on pharma exports to the United States is now coming home to roost.
The report said that the outlook for Irish exports darkened in recent months as the euro sovereign debt crisis threatens to undermine global growth.
The IMF Troika agreement on a debt restructuring plan for Greece is still uncertain , and the Spanish banking crises has now engulfed the sovereign in that country. The ongoing uncertainty being created by the EU political leaders in their approach to resolving the banking debt crises and the related sovereign debt crises has undermined the whole EU member states ability to emerge from the current recession . Ireland is no exception and is certainly being adversely affected by falling import demand in the European Union, which is the single largest market for our exports.
In view of these circumstances, the IEA are forecasting a contraction in merchandise trade export growth of 3pc in 2012, with a return to growth of 2.0pc in export value anticipated for 2013. However , Services exports are expected to grow very robustly by 14pc in 2012 , with a moderation to 8pc growth in 2013.
The IEA anticipate an overall export growth of 2.7pc in 2012 , with a further increase of 4.9pc in 2013.
"The failure by the EU heads of state to resolve the Eurozone crises is creating excessive uncertainty amongst businesses and consumers, not only here in Europe but also in the two largest global economies of the USA and China. The impact on Irish merchandise exports is extensive with exports to the Eurozone contracting by 5pc in the first six months of the year, effectively de-railing the recovery of the many indigenous manufacturing exporters to the region," said Mr Whelan.
"Exports to Ireland's number one export market has taken a severe downturn as the full impact of the end of patent protection has hit pharmaceutical exports to the US in the first half of year. However, patent protection is by market, hence the impact will vary according to the export country destination. Exports to the USA were mostly impacted as the early patent registrations were made there and hence the patent protection has come to an end earliest there. The pharmaceutical exports to the USA fell by 30pc in the first half of 2012, but exports to the EU continued their long term trend growth of 6pc. The industry has been calling for more stream lined approval processes, particularly within the EU, to enable a lower cost in the development and market launching of new medicines onto the market," said Mr Whelan. There was good news, however, in the IEA report for exporters to the UK, where the favourable exchange rate was acting as a boost to exports with exports to the UK returning to growth on the back of a weaker Euro. "The falling value of the euro against sterling has given a welcome boost to exports into the UK market, which grew by 15pc in the first half of the year. The export gains came from pharmaceutical and chemical exports which grew by 33pc and from the 9pc increase in exports of computer equipment. Agri-food exports held their own, with exports values at the same level as for the first six months of 2011," said John Whelan. The report also highlighted the developing opportunities still to be tackled in the BRICS and commented on the disappointing figures on exports to the BRICS fast growing emerging markets which fell by 5pc in the first half of the year. "The slow roll out of real support measures to support the expanded working capital finance requirements for these distant fast growing markets is not helping - for example the Partial Credit Loan guarantee scheme agreed by Government this time last year as a necessary support mechanism to support 1600 medium sized business to expand and grow in these higher risk market, has not yet been rolled out to industry." Finally commenting on the upbeat results for services exports which grew by a very impressive 11pc in the first half of the year, the IEA chief executive said: "The commercial services sector in Ireland continues to develop as a major player in the global market place. Last year commercial services exports from Ireland grew by over 9pc, and in the process our share of the global market rose from 13th largest services exporter to 12th largest according to the WTO annual report. This strong growth continued into the current year, with growth of 11pc in services exports for the first six months of the year. The Computer services sector dominates the export volume accounting for 41pc of the total, closely followed by the Business services (head office management services, air craft leasing, consultancy and research and development ) which accounts for 28pc."