GROWTH IN IRISH exports may not be quite as strong as expected as the eurozone economy slows, National Irish Bank (NIB) has warned this morning.
In its quarterly foreign direct investment (FDI) report, NIB cut its forecast for Irish export growth in 2011 from 7 per cent to 5.5 per cent.
The bank said it downgraded the growth figures as the outlooks for some of Ireland’s key markets has dimmed.
The report’s author, NIB’s chief economist Dr. Ronnie O’Toole said, “The global financial markets have been hit by a nasty cocktail of worsening macro-data and rising discontent among policymakers, which is affecting the outlook for Ireland’s key markets in the US and Europe. A low-growth scenario for the coming two to three years seems increasingly likely in these markets.”
Ireland’s single most important market is the eurozone, accounting for about 40 per cent of total Irish exports. The area grew by only 0.2 per cent in the second quarter of 2011. This sluggishness, as well as double-dip recession fears in the US, could impact negatively on Irish exports, according to the report.
However, the quarterly study did note that the exporting sector had performed well so far in 2011. The CSO said last week that exports were up 6 per cent in the first five months of the year.
FDI: strong start to 2011
Meanwhile, the report said that there is a “continued strength of FDI flows into Ireland”. More than half of 2010’s total FDI has been reached already in 2011.
The report also praised world leaders’ resistance to implementing anti-trade protectionism measures during the financial crisis and its aftermath.
O’Toole said, “This is positive for Ireland in so far as a general move to restrict internationalisation would have disproportionately impacted on economies that are very open to international trade and investment. However, it also serves to emphasise the competitive threat from developing countries, who continue to embrace the benefits of liberalisation.”