A slowdown in consumer spending contributed to a 10 per cent fall in the value of imports in August, according to figures released by the Central Statistics Office (CSO) this morning.
The monthly fall saw the value of imports in August drop to €4.62 billion on a seasonally adjusted basis compared with €5.12 billion in July. Between January and July, the value of imports dropped 5 per cent to €35.07 billion compared with the same period in 2007.
Exports were largely unchanged at €7.12 billion in August, although they were 4 per cent lower at €50.83 over the seven months to July compared to last year.
Dr Ronnie O'Toole, chief economist with National Irish Bank, said when the import bill for fuels - due to high oil prices over the summer – is excluded, “imports for the first eight months of the year are down almost 10 per cent on last year”.
This reflects two factors, according to Dr O’Toole - the slowdown on consumer spending and a fall in exports of electronics equipment, which is heavily dependent on imports for its manufacture.
While exports of electronics have fallen, Dr O’Toole said the important pharmaceutical sector had been a lot more stable.
The global economic slowdown will have “a significant impact on Irish exports, particularly in electronics/machinery – which tends to be a quite cyclical industry, and for more obvious reasons the financial services sector,” he said.
“While there some positive factors going into 2009 - the weakness of the euro against the dollar, and the falling cost of energy, the main scenario is one where Irish exports will be constrained by a sharp slowdown in the world economy.”
For the first seven months of the year, exports of computer equipment declined by 25 per cent to €5.52 billion. The value of computer equipment imports was also lower, falling 21 per cent to €4.08 billion.
Chemical materials exports dropped by 41 per cent to €2.12 billion compared with the same period in 2007. Medical and pharmaceutical exports were 8 per cent lower in the January to July period.
Vehicle imports were 14 per cent lower over the first seven months of this year compared with 2007.
The seasonally adjusted trade surplus in August was €2.50 billion, as against €2.01 billion in July and €1.15 billion in June.
Fine Gael’s deputy finance spokesman, Kieran O’Donnell, said the recent Budget would make Ireland even less competitive as it would inflate the cost of doing business in Ireland.
“Exports are vital to a small open economy like Ireland, yet the Government took the soft option of favouring the construction sector at every step.
"Ireland is now paying the price of Fianna Fáil’s short-term thinking with a damaging recession, exports slumping and business costs going through the roof,” he said.
The value of exports to the United States fell €9.59 billion in the seven months to the end of July, a drop of 3 per cent when compared to the same period in 2007.
Exports to China and Hong Kong grew by 31 per cent over the same period to €1.39 billion.
