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26 January 2015

Export Tiger Roars Again – 2014 Export Review

Posted By: AIB Business
Export Tiger Roars Again – 2014 Export Review

Exports roared into overdrive in the second half of 2014 and propelled the Irish economy into 2015, writes John Whelan, Export Sector Specialist at AIB.

Year-end Trends

Exports from Ireland roared into overdrive in the second half of 2014 as foreign consumers and businesses released pent-up demand and fuelled the biggest expansion in more than a decade. Export sales rose by 8.4% in the July to December period – more than double the growth in the first six months and pushed annual export sales to 22% over the pre-recession levels of 2008


In 2014, Ireland’s foreign sales of goods and services increased by 6.1% in the full year to exceed €190 billion for the first time.

Export businesses managed to shrug off the slowdown in the Eurozone, partly offset by stronger growth in the US, but more generally international risks such as the faltering Chinese and Indian growth (but remaining fast in absolute terms) and more marked downturns in economies such as Brazil, South Africa and Turkey, as well as the situation with Russia and Ukraine, the ongoing conflicts in the Middle East and the risk of Ebola spreading beyond West Africa.

Improved export competitiveness and the focus of the export sectors have been key to the export growth. Goods exporting benefited from the repositioning of the pharmaceutical industry into the specialist bio-logic, high-value, final product manufacturing and the continued growth in global demand for quality agri-food products. Services exporting benefited from the positioning by the Software exporters into the fast-growing cloud computing services sector. Meanwhile export competitiveness was improved through the:

  • contraction in Ireland’s labour costs across the year, with a fall of 1.4% in annual terms (the EU average increase was over one percent)
  • depreciation of the euro by 5% against Sterling and 10.7% against the dollar across the 12 months
  • falling cost of fuel, with Brent Crude down by 47% per barrel since this time last year.

€ Million





Diff €

















Summary Total Exports – Year 2014
Source: CSO and JFW Export Analyst; note latest CSO data update for 2013/2014

The Irish economy is now very competitive and Gross Domestic Product (GDP) is expected to have grown by 5% in 2014, taking the Government deficit to 3.5% of GDP, a full percentage point better than expected at the start of the year.

Key Drivers of Ireland’s exports in 2014 were:

  • Agri-foods exports, which grew by 5.7% to €9.2 billion
  • Medical devices exports, which grew by 11.0% to €5.2 billion
  • Manufactured and engineering goods, which grew by 4.3% to €6.1 billion  
  • Pharmaceutical and chemicals exports, which grew by 2.5% to €51.7 billion.

The key Services export sectors driving the growth were:

  • Business services, growing by 19.4% to €24.6 billion in 2014
  • Computer services, with growth of 9.7% to €42.8 billion
  • Financial services, with growth of 4.5% to €8.5 billion
  • Tourism and travel export growth of 9.6% to €3.7 billion
  • Insurance services for export, growing by 5.8% to €9.5 billion.

Key Markets Buying Irish Goods and Services in 2014

The UK remains a critical market to the Irish export industry as it is the only foreign market for over  50% of SME export companies. The fact that exports to that market contracted by 4.6% in 2014 is therefore a cause for concern, particularly as the exchange rate with Sterling moved in favour of Irish exports – with a steady fall in the Euro across 2014 – to end 8% below the average for 2013. A closer look indicates that agri-food exports held up, with a 4% value gain. However, allowing for exchange rate movements, this effectively is a volume decline in exports. Price pressure from cost-conscious UK consumers has undoubtedly affected sales turnover in the major chains that Irish exporters have traditionally dealt with. Tesco, Marsden and other traditional chains have suffered extensive loss of market share to discounters such as Aldi, Lidl and Iceland. Typically, these discounters have not been the strongest buyers of Irish product. The UK economy was the fastest out of recession some three years ago and hence offered better prospects for Irish exporters than most of the other EU countries. But a  new approach to the market will be needed by most agri-food export businesses if the potential is to be fully realised over the coming year.

The main loss in exports to the UK in 2014 was in the pharmaceutical sector, which saw exports fall by 20%. The sector, dominated by multinational corporations, is still repositioning its products in the UK market to combat the loss of income from generic products following the end of patent protection. As the sector is less labour intensive, the impact on the Irish economy is less than from other sectors.  

Across the Eurozone as a block, exports from Ireland contracted by 1.3% in 2014. The failure to exit the recession over the past six years has held back Ireland’s rate of growth, not just in exports but in the wider economy. The Eurozone markets purchased €3.4 billion of agri-food products from Ireland. This is the same volume as was sold to the UK, but importantly it grew at a strong rate of 5.2% in 2014, pointing to a different competitive position than in the UK. Pharmaceutical exporters from Ireland saw sales to the Eurozone fall by 3% in the year, indicating less severe competition from generic drug producers across the zone than that in the UK.

BRICS countries purchases from Ireland grew by 6% in the year. However, the total exports of €3.6 billion to the BRICS are still very low and only accounts for 4% of total exports from Ireland. Conversely, agri-food exports into China grew very strongly, up 43%, albeit from a low base. This reflects the high quality of both Bord Bia’s and the private sector’s endeavours to access the enormous consumer market there. The impact of the Russian ban on certain agri-food exports from the EU impacted Irish producers also, but not to the extent originally envisaged, hence agri-food exports to Russia also grew during 2014.

The US market has remained a very stable and growing market for Irish exports right through the period from the crises in 2008/9, and 2014 was no exception – with exports to the market growing by 6% to €19.5 billion in goods merchandise. The US is the largest single country market for Irish exporters, taking 22% of output.

Pharmaceutical products dominate the exports to the US and in 2014 accounted for 69% of the total goods exports to the market.  

Forecast for 2015

The recovery is well underway as we enter 2015 and strong export growth rates of six to seven percent are expected to continue through 2015 and into 2016.

The consensus view across the IMF, Dept. of Finance, ESRI, OECD and Central Bank is for a 3.8% GDP growth in 2015, with the ESRI being the most bullish with a forecast of 5.3% growth.

€ Million


Jan- Dec



Diff €

% Change












190, 267




Forecast for 2015
Source: JFW Export Analyst

Consumer spending growth, which is projected to have been broadly similar to GDP growth in 2014, is expected to grow by nearer to 7% in 2015.

Investment growth has picked up strongly recently according to both latest official estimates and recent business surveys. Continued relatively strong investment growth in 2015 is expected but perhaps at a slightly slower rate than in 2014 as business confidence could be affected by increased international risks.

Net exports are expected to continue the positive contribution to economic growth in 2015, despite the ongoing problems in the Eurozone.

Inflation has been below 2% for three years, and we expect it to remain below the 2% target in 2015.

Any immediate rise in official interest rates is not anticipated, but a gradual upward trend seems likely to begin during the course of 2015. In the long term, however, we would still expect official rates to return to more normal historical levels.

Higher interest rates will help savers and reduce pension fund deficits, but borrowers (including businesses and the government) might gain from locking in funding now for long term investments such as infrastructure and housing.

Written by: John Whelan, Export Sector Specialist at AIB

If you require finance to expand into new markets, talk to AIB today.


See also:

Outlook: Exports
AIB’s Outlook: Exports report – in association with Bord Bia and the Irish Exporters Association (IEA) – provides detailed research, analysis and commentary, on a multi-sectoral basis, of the SMEs that are currently exporting goods or services from Ireland. An important part of this report is the specially commissioned detailed research on exporting SMEs, which has been carried out independently by Ipsos MRBI on behalf of AIB.

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