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Strong Increase In Ireland’s Balance Of Trade Figures

James Boston
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Strong Increase In Ireland’s Balance Of Trade Figures

Ireland’s Balance of Trade figures have picked up again according to data just published for the month of May. A surplus of €3.34Bn has been reported compared to an April reading of €2.88Bn, this compares to a market consensus estimate of €2.90Bn.

There has been significant volatility in the data being reported out of Ireland during these early stages of economic recovery, however the overall underlying trend is certainly appearing positive despite the choppy nature of the data points. Sentiment is undoubtedly picking up but domestic demand remains very subdued, this is helping with the positive balance of payments as most durables and luxury items are imported. There is however evidence that this is poised to change over the coming months, new car sales for example in the second half of this year have already come in at a multiple of those in the first half, it has to be noted however that this metric like others is coming off a very low base and is probably a contributing factor to perceived volatility in the economic indicators.

Ireland has not joined with Italy and France in calling for a relaxation of the EU Growth and Stability pact, it is therefore highly likely that it will strive to meet the 3% deficit target when it introduces it’s fifth consecutive austerity budget at the beginning of Q4 this year. Ireland has been an obedient member state in this regard, partly due to the necessary conditions of the EU/IMF bail out and partly due to a desire to retain international economic credibility, an understandable position given the highly open nature of the Irish economy.

Calls however are growing for a renegotiation of Ireland’s banking debt obligations. One of the largest weights on this economy is the 123% Debt to GDP ratio, a significant portion of this debt relates to the infamous banking collapse and consensus is growing that the bond holders that were bailed out should retrospectively bear a portion of this loss.

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