The value of exports continues to run well below last year, according to the latest trade figures. They show that exports in the first half of the year were running 19 per cent below last year's level, while provisional July figures show a 16 per cent drop on the same month in 2002.
Comparison with last year's figures continues to be affected by the impact of a massive fall in electrical machinery trade with Britain, believed to be related to British-based VAT fraud schemes which were closed down last year.
Total electrical machinery exports in the first six months of the year were €2.5 billion, compared to €7 billion in the same period last year. Excluding this from the overall figures (even though not all of it would relate to the VAT scams) reduced the year-on-year export decline in the first six months to just over €4.5 billion, or 11.4 per cent. Some €2 billion of this decline was due to a fall-off in the formerly high-flying organic chemicals sector.
Total exports for the first six months were €39.992 billion and imports were €23.260 billion, down 23 per cent. Imports figures were also affected by the VAT scam, as it involved goods being moved into and out of the State from the UK as part of elaborate schemes to defraud the UK Inland Revenue. In July, exports were €6.670 billion and imports were €3.770 billion, leaving a monthly surplus of €2.9 billion.
Separate industrial production figures show that the volume of production in July from the manufacturing sector was 7.5 per cent ahead of the same month last year. While the industrial production and export figures are measuring different things, the coincidence of rising production volumes and falling export values suggests that many companies may be producing similar volumes to last year, but are being forced to sell it at lower prices.
Further evidence for this came in yesterday's wholesale price figures for August, which showed that the average price which manufacturing industry is getting on export markets is down by 9.6 per cent on last year. This is due in part to the strength of the euro, but also reflects the intense pressure in many sectors for goods to be supplied at lower prices.
Overall, the data published yesterday suggest that a modest recovery may have started, reflecting the gradual international upturn, commented Mr Austin Hughes, economist at IIB Bank. He pointed to the breakdown of the industrial production figures, which showed the volume of production in July in the modern sectors - mainly electronics and chemicals - running 9.7 per cent ahead of the same month last year. In contrast production in all other sectors has been running little changed on last year's levels.
However, IBEC's chief economist, Mr David Croughan, took a less rosy view. He said that while exports in July rose 2.4 per cent on the previous month, their value was still below the end of last year. While industrial production was higher on the year, he pointed out that there were monthly falls compared to June, which "demonstrated the difficulty manufacturing firms were still facing in very slow global markets".
The poor performance was not surprising, he said, as the IBEC/ESRI Monthly Industrial Survey also remains weak, even though there were indications from the survey that order books and production expectations, mainly in the capital goods sector, would show some improvements in the coming months.
