Ireland's €5.6bn trade with Spain risks being damaged as the export credit market destabilises in the face of Spain's worsening economic difficulties, the Irish Exporters' Association (IEA) has warned.
IEA chief executive John Whelan said that many Irish firms that export to Spain rely on export credit insurance to cover the risk of default in payments from their customers there.
He described it as "prudent, good international trade management".
"As has been the case in Greece since the beginning of the sovereign debt crisis there, Irish exporters have seen normal commercial credit insurance withdrawn," he added.
The trade body points out that exports to Greece from Ireland have slumped 25pc since the end of 2007 as normal commercial credit facilities stopped working.
"Failure to react early and plan a supporting government-backed insurance scheme will most likely result in a fall of 25pc in Irish exports to Spain over the next 12 months," claimed Mr Whelan.
The IEA said that Ireland's €5.6bn in exports to Spain last year included €2.3bn worth of services.
The Central Statistics Office said yesterday that Ireland's exports of goods to Spain totalled €244.8m in March, down from €262.6m in March 2011.
From January to March this year the value of goods exported to Spain from Ireland fell to €693.2m from €736.9m in the first three months of 2011.