Slowdown in export growth rate puts economic recovery in doubt
THE rate of exports slowed dramatically during the second half of the year, throwing into doubt the economic recovery.
According to the Irish Exporters' Association, the value of exports rose 4.9pc during 2011 to €171.2bn. While the increase was expected, the growth rate was smaller than had been predicted, having topped 10pc in the first half of the year.
While services exports rose 6.6pc to €78bn, the merchandise exports rate slowed to only 3.5pc.
For 2012, the IEA are forecasting a 3.3pc expansion to €176.9bn.
Despite the overall positive number, IEA chief executive John Whelan warned the export-led recovery was in danger unless the Government took action to help Irish firms break in to the emerging markets, and in particular the BRIC countries.
"While our exports grew by 5pc, the EU average rate was 15pc, so you can see just how far behind the curve we are.
"We need to be looking beyond our traditional markets of the EU and UK, which are forecast to fall back towards recession this year, as well as the United States, and need to concentrate on the likes of Brazil, Russia, India and China. In 2011, only 3.3pc of Irish exports went to the BRICs, while more than 20pc of EU27 exports did.
"The Government needs to step in and look very seriously at the loan guarantee scheme we are expecting this month and export credit insurance for companies trying to trade with non-traditional partners," he added.
"Unfortunately, we are a small open economy that is susceptible to changes in the macro economic environment, but the Government must help us take measures to achieve the growth needed to sustain the recovery," Mr Whelan said.
The grim export figures came as the new head of a leading trade group warned the Government against accepting the mooted Common Consolidated Corporate Tax Base (CCCTB), claiming it would be a "very serious issue for US companies in Ireland".
IBM's Peter O'Neill, who has taken over as president of the American Chamber of Commerce, warned the Government not to give in to EU plans for a CCCTB and added the idea made little economic sense.
"One of the main arguments for the CCCTB has been the idea that it creates cost savings and reduces the burden on business, but a report we commissioned last year showed the opposite to be the case.
"There doesn't seem to be any consensus on the matter, and if the economic argument is not there, then it strikes me as a political issue, but it's not something we would be in favour of.
"We're going to have to keep a very careful eye on it, and it would be a very serious issue for US companies in Ireland (if the CCCTB became reality)," he said.