Hi-tech sector worst affected as economy feels the burn
IRELAND'S hi-tech pharmaceutical and ICT sectors could end up getting badly burnt by the eruption of a faraway volcano.
Both industries dominate the airborne export sector -- the trade of which makes up a staggering €21bn a year, or €400m a week.
The Irish Exporters' Association (IEA) last night said it was not in crisis -- but that critical deliveries could be missed if the devastating ash cloud failed to disappear before Friday.
The travel shutdown could cost Ireland's recession-hit economy up to €500m a week in total if the Icelandic volcano continues to erupt.
In addition to the potential losses of €400m a week in the export industry, at least €49m of grounded airlines' revenue is to go up in smoke.
Meanwhile, the tourism sector is facing losses of at least €20m a week, and the freeze in travel is already taking a heavy toll on struggling businesses.
State-assisted trade missions have been aborted and tens of thousands of tourists and business travellers remain stranded abroad. Conservative estimates put the number of Irish travellers who have been affected at 120,000.
The crisis has already wreaked havoc on the main airlines with troubled Aer Lingus and Ryanair having lost millions.
There has been a financial upside for ferry companies and domestic travel services, but economists warned that the negative impact of the volcanic eruption far outweighed its benefits.
Chief economist at Friends First, Jim Power, said the biggest loser so far had been the tourism industry -- but fears are growing for the €21bn export industry dominated by the pharmaceutical sector.
"Ireland is more exposed than any other country," he said. "Unlike the UK, we do not have the channel tunnel and are really cut off.
"Tourism is the big hit and one week of this would knock about 10,000 off our tourism numbers, which would cost at least €20m a week.
"If it continues into peak season, it will get significantly worse. It is not an opportune time as hotels and restaurants are already under serious pressure so this exacerbates an already difficult situation.
"The total shutdown of airlines is going to do them serious damage. Aer Lingus is already in serious financial difficulty and this is another big hammer blow.
"Apart from the economic and banking system collapse, we have had dreadful weather and now, suddenly, a fresh shock.
"On the upside, people cannot get out of the country and not a lot of our merchandise travels by air."
Although 98pc of the volume of trade to and from Ireland is carried by ship, air-dependent exporters make up a sizeable portion of the value of overseas trade.
The total value of exports is €83bn a year -- and a quarter of this -- some €21bn -- is dependent on air travel.
The sector is dominated by human science exporters, like Pfizer and Wyatt, exporting to the US and Asia.
IEA chief executive John Whelan said he feared his members would be in a critical situation if the crisis continued for a week.
He urged the Government to speed up the release of stabilisation and subsidy scheme funds to rescue businesses on the brink.
"There have been missed deliveries, but if it escalates substantially this week they will begin to miss critical shipments," he warned.
However, the import sector is holding out so far as most of its trade is conducted by sea, with large supermarkets like Tesco only at risk of lower supplies of exotic fruit and orchids.