Ireland braces for export slump as UK economy contracts
THE British economy contracted by more in March alone than it did in a year and half of the financial crisis and it is feared worse is to come. That poses a renewed challenge to the economy here as the pandemic hit to the UK will be harder in April.
Despite its declining economic importance to the State, the UK still accounted for €15.7bn of goods exports last year or more than 10pc of the total, as well as €27bn in services exports.
“Admittedly, the UK economy appears to be faring a bit better than other countries, since it contracted by ‘only’ 2pc quarter on quarter in Q1 – compared to France’s 5.8pc, Spain’s 5.2pc and Italy’s 4.7pc falls,” said Ruth Gregory, senior UK economist at Capital Economics.
“But this is not surprising given that the nationwide lockdowns in Europe were imposed up to two weeks earlier,” she wrote in a report.
While most of the domestic economic activity outside of food retail has been shuttered, most forecasts for the Irish economy suggest that exports will be hit badly – but not as hard as demand here.
Exports are expected to recover sharply next year, with a 7.5pc rebound after a similarsized fall in 2020.
New data from the United Nations today indicates that the hit to global trade from the pandemic looks set to intensify, even though China, the world’s largest economy, has started to reopen.
The UN’s trade body said that the coronavirus pandemic had cut global trade values by 3pc in the first quarter of this year.
“The downturn is expected to accelerate in the second quarter, with global trade projected to record a quarter-on-quarter decline of 27pc,” according to the report by the Committee for the Coordination of Statistical Activities.
Ireland exports €440bn of goods and services annually. Two thirds goes to the US, EU and UK.
The latest forecasts from the Government say the economy will contract by more than 10pc this year.
A survey by the Institute of Directors Ireland today showed that business leaders were pessimistic about prospects in export markets.
Just 16pc of Irish executives see opportunities for growth in the EU this year, compared with a third in home markets.