Irish External Trade (March 2018)

• Seasonally-adjusted surplus of €4,029m, up from the balance of €3,959m posted in February
• Exports down 4.9% month-on-month seasonally-adjusted
• Imports down 8.6% month-on-month seasonally-adjusted
• Unadjusted surplus of €4,164m, €816m lower than March 2017
• Overall trade surplus for 2017 now put at €43.6bn, down from the record-high of €45.2bn in 2016

Seasonally-adjusted surplus rises back to €4,029m

New figures released by the Central Statistics Office (CSO) this morning on the trade balance front were slightly better than expected, showing a rise in the seasonally-adjusted surplus in March to €4,029m from the revised surplus of €3,959m (€3,988m) posted in February. However, March’s surplus was still well down on the record balance of €5,548m recorded in January.

Seasonally-adjusted exports were down 4.9% in the month at €10,373m, while imports recorded a decrease of 8.6% to €6,344m.

Business and consumer confidence have been dented to some degree, though not in major way by the uncertainty surrounding “Brexit”. Indeed, the trade data for 2016 and 2017 were positive. Still, the lack of clarity over the implications of Britain’s decision to leave the EU suggest risks on the external trade front remain elevated going forward, especially for food exporters.

The movement in the euro/sterling exchange rate will be critical in this regard. The pound has been volatile in recent months, and remains a lot higher than desirable for Irish exporters. Positive vibes coming out of Brussels as regards the “Brexit” negotiations will be required if the pound is to regain lost ground and see a sustained appreciation against the euro.

Meanwhile, on an unadjusted basis there was a surplus of €4,164m in March, €816m below the surplus of €4,980m posted in the third month of 2017. However, the adverse weather conditions in March this year and the timing of Easter are likely to have been factors in the year-on-year fall.

The unadjusted value of exports in March was €11,244m, €793m (-6.6%) down on March 2017. Exports of Electrical machinery, apparatus and appliances decreased by €515m (-54.7%) to €426m and Other transport equipment, including aircraft fell by €675m (-75.6%) to €218m in the year. However, on a more positive note, Organic chemicals rose by €1,024m (51.8%) to €3,001m.

One can only speculate as to how “Brexit” will impact Ireland going forward, but there is clearly likely to be a negative impact on trade. 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% of its goods from the UK. While the UK might only account for 16-17% of Ireland’s total exports, 30% of all employment is in sectors which are heavily related to UK exports.

SMEs (agri-food and tourism) will likely be more affected than larger companies by the introduction of tariffs and barriers to trade. However, the fact that the Chinese market has now been opened for the first time ever to a number of Irish beef exporters, will help alleviate the negative impact from “Brexit” to some degree.

The trade outlook going forward remains clouded in uncertainty due to “Brexit”, but we are still anticipating another solid performance this year, with a surplus of around €45bn forecast.

Irish External Trade (Source: CSO)
Month Exports
€m Imports
€m Trade Balance €m Exports
s.a. €m Imports
s.a. €m Trade Balance s.a €m
2017 March 12,037 7,057 4,980 11,044 6,188 4,857
2018 January 11,980 6,450 5,530 12,388 6,840 5,548
2018 February 10,297 6,379 3,918 10,904 6,945 3,959
2018 March 11,244 7,080 4,164 10,373 6,344 4,029

Alan McQuaid (16/5/18)
Economist