Record sales of the impotence drug Viagra contributed to the huge rise in the value of Irish exports in the first three months of this year. The "unbelievable" export figures point to an economy growing by at least 12.5 per cent this year, according to Dr Dan McLaughlin, chief economist at ABN Amro.
Exports in the three months from January to March were 29 per cent higher than in the same period last year, with imports keeping pace by rising at a record 28 per cent, according to figures released yesterday by the Central Statistics Office.
A full breakdown of the figures is only available for January and February, but this too shows a rise of 28 per cent in exports and 30 per cent in imports over the first two months in 1997.
Exports of organic chemicals, where Viagra is classified, increased by 61 per cent to £1.03 billion in the first two months of 1998, compared with the same period last year. The key ingredient of Viagra is manufactured by Pfizer in Ringaskiddy, Co Cork.
Dr McLaughlin said the record-breaking export figures mean the economy is growing far more quickly than had been predicted. He has lifted his estimate for economic growth this year to 12.5 per cent, and added that this may need to be raised again if exports continue to grow at such a rapid pace.
In March the State exported £3.8 billion of goods, the highest monthly total to date. The previous high was £3.3 billion in February. The figures bring the cumulative rise in monthly exports since 1990 to 131 per cent, "another extraordinary statistic in what has been an unprecedented period of expansion for the Irish economy," he said.
Dr McLaughlin is now predicting a 12.5 per cent rise in Gross Domestic Product this year. This should equate to an increase of about 11 per cent in Gross National Product, a slightly different measure of the national economy which adjusts for multi national profit repatriations.
He added that this raises the prospect of a revaluation again. If we cannot raise interest rates, one way to cool the economy would be to revalue the exchange rate to DM2.55 or DM2.60, he said.
"These numbers certainly suggest we are not overvalued."
Revaluing the pound's central ERM rate would mean locking into monetary union at a higher exchange rate, which would help to keep down import prices.