Amid a climate of escalating trade tensions and stagnating global growth – big negatives for a small open economy such as the Republic – Irish exports are flying.
The latest trade figures show the value of Irish goods exports jumped to a record €13.7 billion in January, generating a monthly trade surplus of just under €7.2 billion. The positive trend is being driven by big pharma, which dominates Ireland’s export trade, accounting for more than 60 per cent of total exports.
The Republic plays host to 24 of 25 biggest global pharma players, including Johnson & Johnson, Roche, Pfizer, Novartis and AbbVie.
The disproportionately large size of these groups means certain company-specific developments such as the launch of a new product or the onshoring of IP assets can trigger big changes in headline indicators. That’s why our number can be temporarily out of kilter with global trends.
The 5.3 per cent jump in the value of exports in the final quarter of last year, detailed in separate national accounts data published on Thursday, is a case in point.
It comes against a backdrop of negativity on international markets, which has prompted the European Central Bank and the US Federal Reserve to press pause on their rate hike schedules.
So while domestic indicators such as employment, property prices and consumer spending point to a cooling in the Irish economy, overseas components remain erratic and unpredictable.
The 2015 GDP growth figure of 26 per cent, derided internationally as ludicrous for an advanced economy, was entirely predicated on the mass onshoring of assets amid a global clampdown on multinational tax avoidance.
The problem is the potential lack of stability these numbers imply. It’s all good while export and corporation tax metrics go our way but what happens if they go into reverse?
It’s inherently better for an economy to have 10 years of 5 per cent growth rather than five years of 10 per cent growth and then a flatline.
