Big pharma drives Ireland’s trade surplus to record high

The value of Irish exports jumped 16 per cent to nearly €10.3 billion in August with big pharma once again proving the driving force.

The latest trade numbers from the Central Statistics Office (CSO) show imports fell 2 per cent to €5.3 billion. As a result the State's trade surplus rose to a record high of €4.95 billion, up €1.5 billion or 43 per cent on the previous month.

In volume terms, exports grew 11.7 per cent in August, effectively undoing a 10.3 per cent drop in July.

The August figures do not appear to have been affected by Brexit or the subsequent crash in sterling, albeit most experts believe this may start becoming a factor later in the year.

The value of goods exports for the eight months to the end of August was €76 billion, an increase of €3.3 billion (up 5 per cent) when compared with the equivalent period last year.

The figures show exports of organic chemicals increased €976 million, or 66 per cent, to €2.46 billion in August compared with the same month last year, while exports of medical and pharmaceutical products increased €258 million (+10 per cent) to €2.8 billion.

Exports of electrical machinery, apparatus and appliances increased €377 million (+192 per cent) to €573 million over the same comparative period.

The EU accounted for €5.15 billion or 51 per cent of total exports in August, of which 15 per cent went to Belgium.

Drug redistribution

Antwerp

is one of the largest global drug redistribution hubs and receives most of the State’s pharma exports which are not destined for the US.

The US was the main non-EU destination accounting for 25 per cent or €2.5 billion of total exports in August.

Imports of organic chemicals increased €297 million (+161 per cent) to €482 million in August, while imports of medical and pharmaceutical products increased €182 million (+46 per cent) to €576 million over the same period.

The EU accounted for 59 per cent of the value of goods imports in August, with €1.2 billion (24 per cent) of total imports coming from Britain.

Merrion analyst Alan McQuaid said: “One can only speculate as to how Brexit will impact Ireland in the coming months and years, but there is likely to be a negative impact on trade.

Employment

“The UK is the second largest single country for Ireland’s goods and the largest for its services. At the same time Ireland imports 30 per cent of its goods from the UK. While the UK might only account for 16-17 per cent of Ireland’s total exports, 30 per cent of all employment is in sectors which are heavily related to UK exports.”

Davy analyst David McNamara said this year has been a challenging year for Irish exporters with sterling now down 18 per cent against the euro year-to-date, squeezing Irish exporters’ margins – particularly in traditional manufacturing sectors reliant on trade with the UK.

“This and the risk of a significant slowdown in UK growth suggest that exports will make a smaller contribution to Irish growth this year.”