Wednesday, October 03 10:31:45
Irish exporters have been taking full advantage of their competitive edge and the weakness in the euro and have been bearing up well despite signs of global economic difficulties, according to a report from Investec Bank Ireland.
Its fourth Investec Ireland Export Analysis Report (IIEAR), which captures export demand, export competitiveness and the pace of GDP growth in Ireland's 15 major trading partners, rose by 0.7pc in the second quarter compared to a year earlier.
The index held steady against the backdrop of a weakening global economy, a UK economy in recession and a contracting Eurozone economy.
"Conditions faced by Ireland's exporters remain difficult. However, they have shown resilience, seeking out further competitiveness gains, whilst drawing benefits too from a weaker euro. Various indicators show that Ireland has regained the ground it lost over the first half of the previous decade as labour costs have been restrained and as firms have strived to improve productivity. Data from the European Central Bank also shows that Ireland has also made gains in competitiveness relative to the rest of the Euro area of around 18pc over the past five years. Ireland's ever improving competitiveness will aid the Irish economy, and its exports, in mitigating against the increasing challenges posed by the global slowdown," said Aisling Dodgson, Head of Treasury, Investec Ireland.
The Euro slipped back over the quarter against the dollar and sterling, supporting Ireland's export competitiveness, it said.
The US remains the bright spot of the IIEAR, with its economy having expanded by 0.4pc through Q2. Irish exporters more oriented to the US economy may find conditions less tough than those faced by European focused exporters.
The UK accounts for around 20pc of Irish exports and remains a challenging market for Irish exporters through the quarter, with the UK economy having shrunk for its third consecutive quarter and with consumer demand remaining weak.
China continues its positive contribution through Q2, despite pace of expansion slowing in the first half of the year. Fears of a further slowdown in China remain in place, but China remains a relatively robust source of demand for exporters to that market.
Victoria Clarke, Investec Economics, added, "The announcement by the European Central Bank of its new bond-buying scheme, the OMT (Outright Monetary Transactions), has provided a boost to sentiment in capital markets and should help to ease strains in credit channels through the remainder of the year. Coupled with the US Federal Reserve announcing 'QE3', this should support Ireland's main export partners in delivering firmer growth through the second half of the year. In this context, the resilience and dynamism of Irish exporters is likely to be tested while they look to build their export base as the global economy recovers further through 2013. Any further competitiveness gains that can be eked out over the months ahead could prove to be important."
"Ireland's continued attractiveness as a location for Foreign Direct investment (FDI) should provide further support in the face of the tough conditions. Ireland has met all of its mid-year performance targets under its IMF support programme and this is also likely to reinforce Ireland as a location to do international business from. Whilst there is no doubt Irish exporters face continued headwinds, their record to date suggests the export sector will come out fighting, ready to make advances as recovery headwinds eventually fade. Most importantly it should be emphasised that Ireland has a number of advantages principally related to its dynamism and its ability to reinvent itself," said Aisling Dodgson.