Trade surplus rose 14% to €29.2bn last year

THE STATES trade surplus rose 14 per cent in 2008 to a four-year high of €29.2 billion, largely due to a decline in the value of imports, according to Central Statistics Office (CSO) data.

Last year the value of road vehicles imported dropped 30 per cent to €3.1 billion while the value of computer equipment declined 27 per cent to €6.7 billion.

For the year, imports were 10 per cent down at €56.9 billion compared with 2007.

On the export side the annual decline was 3 per cent to €86.2 billion.

If the decline in computer parts is excluded, the value of exports held steady last year.

Preliminary details for January 2009 show imports declined on a seasonally adjusted basis to €3.9 billion compared to €5.3 billion 12 months ago.

Exports for that month were €7.3 billion, down €106 million from the value of goods sent overseas in January 2008.

Economist with stockbrokers Bloxham Alan McQuaid said external trade was the only shining light for the Irish economy.

However, he said the strong external trade surplus was more a reflection of weakening consumer demand and lower imports, than buoyant exports.

Mr McQuaid said the strong trade balance will help limit the overall contraction in gross domestic product and gross national product this year.

The broad chemicals sector, which includes the pharmaceutical industry, accounted for almost half of all merchandise exports last year.

Foreign-owned high technology sectors were the dominant sources of merchandise export activity during 2008. Most notable of such sectors was the performance of the broad chemicals industry.

Mr McQuaid said that exports were likely to suffer this year due to weak demand, adding the lagged impact of past exchange rate appreciation will be particularly acute this year.

With domestic demand weakening Mr McQuaid said that merchandise imports were likely to fall significantly again this year.

Last year exports to the UK declined by 5 per cent to €14.3 billion, possibly due the depreciation of sterling, while exports to China shot up by 17 per cent to €2.3 billion.

Exports to the US rose 5 per cent to €16.6 billion with the value of goods sent to Spain up 9 per cent to €3.5 billion.