Seasonally adjusted exports have remained static while imports have decreased by 24% (or €1,200m) between April and May 2011. This has resulted in a widening of the trade balance €3,783 million (as can be observed in Figure 1).
Relative to April 2010, we can see Ireland’s export growth and stabilisation over the past year has been cantered predominately in one area. The Chemical and Related Products sector accounted for 61% of exports in April 2010 and this has increased to 64% of exports in April 2011. These figures show the dependence of Irish exports on one broad sector, indicating a lack of diversity in our export portfolio.
If we look in greater detail at the Chemical and Related Products sector it is clear that even within this category it is a relatively small number of sectors which is driving exports. Figure 3 displays the contribution of the various sub-components of the Chemical and Related Products sector to exports. It is clear to see that Organic Chemicals and Medical and Pharmaceutical Products make up for the majority of Ireland’s exports in the Chemical and Related Products sector. In total these two sub-components account for 82% of Ireland’s exports in Chemical and Related Products and 52% of our total exports. This shows the dependence of Ireland’s exports on two specific sectors which are mainly comprised of multinational enterprises. A shock to either of these two sectors could have serious implications for Ireland’s “export lead recovery”.
Justin Doran is a Lecturer in Economics, in the Department of Economics, University College Cork, Ireland.