Asian markets will become increasingly important for Irish exports over the next 15 years to offset the negative impact of Brexit on the Irish economy, research shows.
A trade forecast published by HSBC and Oxford Economics predicts significant growth in trade between Ireland and countries such as China and Vietnam over the next decade and a half.
HSBC predicts that the fastest-growing export destination for Ireland between now and 2030 will be Vietnam, followed by China, India and Malaysia. Together, these countries are expected to account for about 40 per cent of the growth in merchandise exports.
The pharmaceutical sector will continue to underpin Irish export growth and contribute about 60 per cent of the total growth in Ireland’s merchandise exports.
Alan Duffy, chief executive of HSBC Ireland, said that established trading markets would continue to be the leading destination for Irish exports despite the forecasted growth in emerging economies.
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“As we navigate uncertainty, making trade forecasts is unusually difficult. Nevertheless, whilst we will see uncertainty and confidence effects on domestic demand over the medium term, it is unlikely to derail it completely.
“Ireland will continue to look to advanced economies as its primary merchandise export market market and the UK and US will continue to be key in the long term. However, rising disposable income levels in Asia will also lead to some rebalancing over time, with exports to China expected to grow by 10 per cent in the decade to 2030,” Mr Duffy said.
Figures from the Central Statistics Office showed that Brexit continued to have a muted effect on exports in October.
The total value of Irish exports grew by 2 per cent to €10.27 billion compared with the previous month and imports fell by 18 per cent to €5.18 billion.
The trade surplus rose to €5.09 billion in October, the highest on record and 34 per cent higher than the previous month’s surplus. On an annual basis, exports grew by 8.9 per cent.
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Alan McQuaid, chief economist at Merrion, the stockbroker, said that the data showed that Irish exports had weathered much of the post-Brexit storm.
“New figures released this morning were, on the trade balance front, a lot stronger than expected again suggesting that Brexit-related concerns remained well-contained at the moment. That said, the sharp drop in imports may reflect some worries about the overall impact on the economy going forward from Britain’s decision to leave the EU. Risks on the external trade front remain elevated heading into 2017, especially for food exporters,” Mr McQuaid said.
Mr McQuaid said that he expected the 2016 trade surplus to be in the region of €46 billion, an increase on last year’s €42.3 billion surplus.
David McNamara, an economist with Davy Stockbrokers, said that some sectors were already feeling the impact of Brexit more than others, however.
Pharmaceutical exports were up 11.5 per cent year-on-year in the three months to October compared with non-pharma exports which were 1.7 per cent higher over the same period.
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Mr McNamara said sectors that food and manufacturing, which were more exposed to sterling’s devaluation, had weakened since the Brexit referendum.