Irish economic statistics are hard to understand at the best of times, but in recent years “difficult” has, in some cases, become “impossible”. Headline trends are always clear enough – the figures are the figures. But the combination of big inflows of intellectual property assets and the particularities of export data, which include significant amounts of goods produced outside the State, mean it is difficult to interpret what the figures actually mean.
And so the latest export figures, which show goods exports were worth €16.7 billion in May, down €1.2 billion on the same month last year, require some investigation. It is part of a trend which has seen overall exports in the first five months down by 6 per cent on 2022, a sharp reversal of the upward trend in recent years. The fall is almost entirely due to a drop in exports to the United States, off a hefty 23 per cent in the January-May period. Looking at product headings, it is clear that the main fall is in the sectors covering pharmaceuticals and medical products and chemicals.
A focus of big US pharmaceutical companies based here in recent years has been exporting product back to the American market, a trend criticised by some US economists as depriving Washington of valuable tax revenues. In most sectors, US companies in Ireland serve non-US markets, typically in Europe, but a lot of pharma exports go back to the US. These exports boomed during the pandemic period, with Goodbody economist Dermot O’Leary pointing out that pharma and medical product exports to the US grew from €21 billion in 2019 to an annual figure of €33 billion in the 12 months to the middle of last year. And now they have fallen back to €22.5 billion in the 12 months to this May.
Given the huge pharma investment here in recent years, most analysts believe exports may revive after this rollercoaster move. But we just don’t know, mainly because the reasons behind the same increase are not entirely clear. With big pharma among Ireland’s major corporate taxpayers, this is a trend to monitor closely.
