Exports fell sharply in January, according to new data from the Central Statistics Office, underlining the impact of the weak international economy on the Republic.
The figures were published yesterday amid fresh warnings that a prolonged war could further delay a global pick-up.
The latest figures show exports of €6,280 million in January, down 9 per cent from the previous month, while imports of €3,950 million were down 7 per cent from December 2002. Both imports and exports were about 25 per cent down on the same month last year.
Meanwhile, detailed figures published for all of 2002 show that exports for the year of €93,723 million were just 1 per cent up on 2001. While the increase was welcomed by the Minister for Trade and Commerce, Mr Michael Ahern, the growth was entirely due to an extraordinary 75 per cent rise in pharmaceutical and medical product exports to €15,675 million. If this sector is excluded, then exports from all other sectors were actually 6.75 per cent lower last year than in 2001. The euro's strength will put further pressure on exports this year.
Overall imports for the year fell by 4 per cent to €55,303 million and the surplus of exports over imports was €38,421 million, up 9 per cent on 2001.
The precise reason for the surge in pharmaceutical exports is unclear, but it is evident that multinational subsidiaries here are reporting very high production and profit levels from their Irish operations, probably encouraged by the low 12.5 per cent rate of corporation tax here. Given that this sector employs only about 25,000 people, its wider economic importance is limited.
The latest figures indicate that the economy is "very flat", according to Mr Colm McCarthy, managing director of DKM economic consultants. While the final growth figures for 2002 may show a rise of about 1.5 per cent in Gross National Product, this growth took place in the early part of last year and the economy was flat late last year and moving into 2003, he said.
Mr David Croughan, IBEC's chief economist, said the figures showed that "the low level of activity that characterised the final quarter of last year, continued, as expected, into January".
This low level of export growth in January confirmed the IBEC/ESRI Monthly Industrial Production Survey where the preliminary indications from the March survey suggested there would be no pick-up in exports at least until the summer, he said.
Separate CSO figures yesterday show a 5.3 per cent fall in manufacturing output prices in January which, said Mr Croughan, "demonstrated the intense competitive pressure companies were under in maintaining their share of flagging export markets".
Factory gate prices for goods sold on the home market were up 2.7 per cent, but export prices fell by 7.9 per cent, highlighting the extreme competitive pressures facing exporters.
It was extremely important, therefore, that all sources of domestic cost increases were firmly tackled because companies could not possibly absorb such increases in such hostile trading conditions, Mr Croughan said.
Meanwhile, there is no sign of an early improvement in global conditions, with the International Monetary Fund warning that a long war could undermine the global recovery and disappoint markets which had generally bet on a fast outcome.
Even a short war might have longer-lasting economic fallout, it said, due to its impact on the region and fears that it could spark terrorist attacks. - (Additional reporting by Reuters)
