Non-EU export figures signal break in pattern of growth

New evidence of the slowdown in the economy in the second quarter of the year emerged yesterday in the latest figures on trade between the Republic and countries outside the EU.

The seasonally adjusted statistics from the Central Statistics Office show that while Irish exports to non-EU countries grew by £90 million (#114 million) between April and May of this year, year-on-year growth was beginning to diminish over the same month.

Between April 2000 and April 2001, non-EU exports grew by 27 per cent, but corresponding growth for May was less than half that figure, standing at 13.6 per cent. While Irish/non-EU trade figures are just partial economic indicators, this is nonetheless a pattern-breaking development in growth terms.

Economists differed yesterday about the significance of the drop, but the unifying view was the figures were indicative of a slowdown of sorts.

Dr Dan McLaughlin, chief economist with Bank of Ireland, remained bullish on the economy but acknowledged that a slowdown was "finally coming into the numbers". He said that the Republic's exports were still "remarkable", comparing overall numbers for the January to May period in 2001 with that of 2000. Average growth for the year, said Dr McLaughlin, was still going to be "pretty high".

Mr Austin Hughes, chief economist at Irish Intercontinental Bank was less optimistic, however, characterising the May-to-May fall in non-EU exports as "a material slowdown" in the economy that was supported by a corresponding fall in domestic tax revenues in the same month.

Mr Hughes cited a slight falloff in non-EU imports in May - from £1,364 million (#1,732 million) in April to £1,329 million - to support his view, saying that falling imports were consistent with a weakening economy. In the case of the Republic, this may be linked with weaker import demand from Irish-based US companies, and would thus be consistent with a US-led global slowdown, said Mr Hughes.

He highlighted weaker import figures for office machines and automatic data processing machines, a factor which he said may present "tentative evidence" that Irish-based United States PC manufacturers could be scaling back imports in anticipation of lower production levels.

Despite the May-on-May fall, Irish exports to the US still grew by 39 per cent when the first five months of this year are compared to the same period in 2000. According to both economists, this increase can be largely attributed to the "Viagra effect", or high volumes of chemical exports from Irish-based drug manufacturers such as Pfizer. Exports to the US of chemicals and related products amounted to just above £4,576 million from January to May this year, compared with £3,182 million in the same period last year.

Reasons for a rise of 59 per cent in exports to Switzerland over the same period are less clear, but links to the chemical industry are again likely.