Irish trade surplus hits all-time high in June

DUBLIN: Ireland's trade surplus surged 8 percent to reach an all-time high of 4.08 billion euros in June, pointing to a strong first-half export performance even as the outlook for the rest of the year worsens.

Ireland is relying on strong exports this year to compensate for shrinking domestic demand and ensure it clocks up its first year of economic growth since 2007.

A return to growth is vital if Dublin is to make inroads into its large debt pile and meet its fiscal goals under an EU-IMF bailout.

Analysts expect Ireland will broadly meet its forecasts for an expansion this year of 0.8 percent but expect the government will fall short of a forecast 2.5 percent for 2012 by around half a percentage point.

"The first half performance, from the Q1 national accounts and from the trade figures today and from the (foreign direct investment) flows that we are seeing, all suggest a pretty good performance for Ireland so far," said Ronnie O'Toole, economist at National Irish Bank.

"But when we look at what the world economy is doing the outlook for the second half is weaker."

The Central Statistics Office said Ireland's seasonally-adjusted trade surplus in goods was 4.079 billion euros, narrowly beating the previous all-time high of 4.005 billion registered in July last year.

Ireland exported 7.900 billion euros worth of goods in June, while importing 3.821 billion euros. The data is provisional.

The CSO figures relate to exports of goods, which account for just over half of total exports, and have been sluggish compared to exports of services.

"We have strong reason to believe that services will continue to be the growth area," said O'Toole.

Exports increased by 6 percent in the first five months of the year compared to the same period last year, the data showed.

The strongest export growth in that period was in sales of food and live animals, which rose 19 percent, and exports of chemicals, which grew 10 percent.

"Following a record merchandise trade surplus of 43.465 billion euros in 2010, Ireland is on course for another record surplus this year, of around 45 billion euros," said Alan McQuaid, economist at Bloxham Stockbrokers.

Copyright Reuters, 2011