Irish External Trade (July 2018)

• Seasonally-adjusted surplus of €3,970m, up from the balance of €3,732m posted in June
• Exports up 0.4% month-on-month seasonally-adjusted
• Imports down 2.4% month-on-month seasonally-adjusted
• Unadjusted surplus of €3,429m, €337m lower than July 2017

Seasonally-adjusted surplus picks up to €3,970m

New figures released by the Central Statistics Office (CSO) this morning on the trade balance front show a rise in the seasonally-adjusted surplus in July to €3,970m, from the revised surplus of €3,732m (€4,054m) posted in June. Seasonally-adjusted exports were up 0.4% in the month at €11,846m, while imports recorded a fall of 2.4% to €7,876m.

Business and consumer confidence have been dented to some degree, though not in major way by the uncertainty surrounding “Brexit”. 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 the UK and 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, but that doesn’t appear to be forthcoming at this juncture.

Meanwhile, on an unadjusted basis there was a surplus of €3,429m in July, €337m below the surplus of €3,766m posted in the seventh month of 2017. The cumulative surplus in the first seven months of 2018 amounted to €31,023m, €4,476m above the surplus of €26,547m in the same period last year.

The unadjusted value of exports in July was €11,021m, €1,843m (20.1%) up on July 2017. Exports of Medical and pharmaceutical products increased by €993m (37.2%) to €3,662m, while exports of Organic chemicals rose by €534m (41.1%) to €1,834m. Exports of Office machines and automatic processing machines increased by €68m (24.1%) to €350m.

The unadjusted value of imports in July was €7,593m, €2,180m (40.3%) up on July 2017. Imports of Medical and pharmaceutical products increased by €676m (118.4%) to €1,247m, while imports of Other transport equipment, including aircraft rose by €1,064m (163.4%) to €1,715m.

In terms of the outlook for exports for 2018 as a whole, available external demand indicators point to sustained growth in the near-term. At this juncture, weighted trading partner demand for both 2018 and 2019 remains solid. Furthermore, the new export orders sub-index of the Manufacturing PMI exceeded long-run averages during the second quarter of 2018.

But, while external demand growth seems set to remain robust in the near-term, the implementation of higher trade tariffs and the possibility of more protectionist measures represent a key risk to the overall prospects for the export sector going forward. On top of that, there still appears to be a strong chance of a “hard Brexit”. Therefore, taking all factors into account, trade risks are tilted to the downside.

While there are a lot of uncertainties regarding the outlook, we are still anticipating another strong performance this year, with a record surplus of around €48bn forecast, up from €43.4bn in 2017. Overall export volume growth of 8.5% is now projected for 2018 as against 7.8% last year.

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 July 9,178 5,412 3,766 9,729 5,757 3,972
2018 May 11,753 6,842 4,911 11,714 6,492 5,222
2018 June 12,766 8,101 4,665 11,798 8,066 3,732
2018 July 11,021 7,593 3,429 11,846 7,876 3,970

Alan McQuaid (14/9/18)
Economist