Exports Slump

Bits_n_Bobs

Spotted today that the IEA have decreased their exports growth by a whopping 5% (must be using the same economists as the dept of finance...). Is there any multiplier between export growth/contraction and GDP or is it horrendously complicated?

gaius c

Patent cliff.
http://www.rte.ie/news/business/2013/0808/467012-half-yearly-export-levels-down-2/
All our eggs are in the pharma basket so when they catch a cold, we get ebola.

antoobrien

Bits_n_Bobs wrote: »

Spotted today that the IEA have decreased their exports growth by a whopping 5% (must be using the same economists as the dept of finance...). Is there any multiplier between export growth/contraction and GDP or is it horrendously complicated?

The value of the pharma exports had dropped off, but we are probably exporting the same number (if not more) actual units.

Bits_n_Bobs

From what I read the pharma exports are way down but agri, food and drink etc are actually up (source; http://www.independent.ie/business/export-association-changes-growth-forecast-to-negative-29483906.html)

I'm guessing a drop in pharma should be off-set by an increase in agri, food and drink (labour intensive, more profits kept in Ireland, indigenous co's etc) but is that actually the case?

Sand

Irish exports are essentially a function of accountancy due to our low corporate tax rate and the international norms of transferring profits to the lowest taxable link in the chain. We shouldn't exchange high fives when Irish exports go up. We shouldn't panic and over-react when Irish exports go down.

Cody Pomeray

Sand wrote: »

We shouldn't panic and over-react when Irish exports go down.

While panicking is not a strategy, we should at least be very concerned.

The Irish Government, in its wisdom, has signed up to a process which defines sustainable indebtedness as a random proportion of GDP.

GDP may only be a virtual metric, yet GDP figures have the capacity to aggravate Ireland's austerity program.

spank_inferno

True.

The government need an ever increasing GDP to cover up their ever inflating gov debt bubble. (debt as % of GDP).

A drop in pharma exports & GDP value might make gov debt projections a tad awkward.

Mucco

While the pharma sector counts for a very significant part of our exports in goods, it also accounts for a huge portion of our imports in services - royalty payments to the patent owner. The amount of money that remains in Ireland is nowhere near the €50b in exports.

Sand

Cody Pomeray wrote: »

While panicking is not a strategy, we should at least be very concerned.

The Irish Government, in its wisdom, has signed up to a process which defines sustainable indebtedness as a random proportion of GDP.

GDP may only be a virtual metric, yet GDP figures have the capacity to aggravate Ireland's austerity program.

Why? Irish exports are like Irish GDP. There is so much noise in the system from our role as a massive low tax harbour (if not haven) that over-analyzing GDP and export shifts quarter by quarter or year by year at a time when the economy is essentially dredging the bottom of the sea is pointless. Only a short while ago Ireland was a Teutonic exporting hero, now we're in dire straights, next week we'll be an exporting machine again, and so on and so forth. The decline in "Irish" exports probably has more to do with companies like Google being hauled in front of the House of Commons to explain why they are declaring profits on UK activity so they are taxed in Ireland. Even though Google offered a stirring defense of the practice ( everyone else is doing it...) even they would be incentivised to keep their heads down until the heat blows over.

The only stat that will generate a "feel good" factor in the economy is when the unemployment rate halves. So far, the unemployment rate has stubbornly ignored the apparently amazing changes in export performance which demonstrates the real value of those supposed exports.

Cookie_Monster

There's a great opportunity to push dairy at the moment with New Zealand having shot itself in the foot yet again. We already have a very good reputation for food produce export and should be taking advantage if it now more than ever.

spank_inferno

Cookie_Monster wrote: »

There's a great opportunity to push dairy at the moment with New Zealand having shot itself in the foot yet again. We already have a very good reputation for food produce export and should be taking advantage if it now more than ever.

Already being done.
The majority of product is already exported.

Companies are working hard on African & asian markets.
Once quotas are gone production will continue to rise.
Ireland has a good deal of un-used production capacity for dairy.

ardmacha

One imagines that the trade surplus may decline less than the exports and the balance of payments by less again, as there will be fewer royalty payments.

It may even lead to more realsitic assessment of Ireland's prospects. The Troika can claim that we are an export success, so no change of policy is needed, even though this has a tenous connection to the real economy.

Cody Pomeray

Sand wrote: »

Why? Irish exports are like Irish GDP. There is so much noise in the system from our role as a massive low tax harbour ...

But this has nothing to do with that I said.

Ireland has signed up to an assistance programme and to an international treaty which constrain Irish fiscal policy in terms of indebtedness as a proportion of GDP 'ceiling'.

My point is not that GDP is inherently meaningful. No, my point is that it has been given an artificial, undeserved importance, with real implications for further austerity.

Sand

It does though - you said we should be at least concerned. We shouldn't. If you get concerned by every decline and excited by every rise in Irish exports you'll essentially end up bi-polar. We are a clearing house in the international tax avoidance game. That's not essentially a bad thing, but it does mean that we cant draw many useful conclusions from stats that were designed to reflect activity for vastly larger economies not as prone to massive shifts due to minor international activity.

The decision to campaign for a the EU Fiscal Treaty was dumb, as was the decision by the electorate to approve it as we are now at the mercy of a fairly irrelevant statistical straitjacket, but hey...that's the problem with democracy. You get a vote. So does everyone else.

Cody Pomeray

Sand wrote: »

a fairly irrelevant statistical straitjacket

Irrelevant?

The fiscal treaty and the troika programmes use debt:GDP as a metric. If you think these are irrelevant to society you're kidding yourself.

Mr.Micro

Sand wrote: »

The only stat that will generate a "feel good" factor in the economy is when the unemployment rate halves. So far, the unemployment rate has stubbornly ignored the apparently amazing changes in export performance which demonstrates the real value of those supposed exports.

On paper it looks so much different to the reality as you say. Visually the patient looks well, but the reality is the patient is still sick.

Sand

Cody Pomeray wrote: »

Irrelevant?

The fiscal treaty and the troika programmes use debt:GDP as a metric. If you think these are irrelevant to society you're kidding yourself.

My point is not that GDP is inherently meaningful. No, my point is that it has been given an artificial, undeserved importance, with real implications for further austerity.

When you lads figured out what your shared opinion is let me know.

Cody Pomeray

There's no inconsistency between those statements.

I have said GDP is not an inherently meaningful figure in Ireland.

It has, however, been given an artificial importance through an international treaty and by reason of the troika program.

Therefore despite its lack of inherent meaning, GDP is of a practical, meaningful importance to Irish society.

Or are you saying we shouldn't worry about Debt: GDP?

Sand

Okay. And what did you think I said?

Cookie_Monster

spank_inferno wrote: »

Already being done.
The majority of product is already exported.

Companies are working hard on African & asian markets.
Once quotas are gone production will continue to rise.
Ireland has a good deal of un-used production capacity for dairy.

Meant to get back to this. I am aware that export are very good but such a huge market opportunity with NZs mess up, essentially money for nothing if companies and govt are quick off the mark to get in while countries have suspend NZ sales.

nice_guy80

grass always grows, cows always produce milk

China needs more powdered milk every year along with other Asian countries

If we could corner this market, exports could keep going up

Bits_n_Bobs

The Irish agri business would need a complete revolution to compete with NZ in shipping dairy products to China. Pretty sure this would extend to large chunks of EU farming regulations being re-written and a free market approach adopted across the EU.

maninasia

Cookie_Monster wrote: »

Meant to get back to this. I am aware that export are very good but such a huge market opportunity with NZs mess up, essentially money for nothing if companies and govt are quick off the mark to get in while countries have suspend NZ sales.

The quota system has limited Irish dairy expansion in Asia. Irish companies has been very slow off the mark to get into Asian markets.

Meanwhile the Kiwis and Aussies are promoting their food and drink everywhere. They even promote Kiwi fruit in kids shows on TV. The Aussies promote 'Angus beef' for steak everywhere as US beef, although still popular, has issues with hormones. Irish companies have some good sales in terms of whey and infant formula but again through other international brands, not their own. They have no brand presence. Last week I got some 'Irish style cheddar cheese' in the local luxury food store. Made by in Holland, but tasted like the real thing to be honest!
Even the Scottish have their mature cheddar brands etc, but Irish brands..nothing, nada, zilch.

Who is big in cider, the British and the Swedes..Magners, Bulmers etc...nowhere to be found.

The ONLY Irish brand and product made in Ireland you will find regularly is Guinness (there is also Guinness from Malaysia, but the James Gate stuff is getting more common now) , even Irish whiskey is not that common in Asia.

Salmon all comes from Norway, Canada and Alaska.

I've talked to Irish companies about importing their stuff into Asia but most were up their own arse, they seemed to think I'd be doing them a favour at the same time as actually BUYING their product, while they have ZERO sales in most Asian countries. Got their logic mixed up.

skafish

maninasia wrote: »

Salmon all comes from Norway, Canada and Alaska.

I've talked to Irish companies about importing their stuff into Asia but most were up their own arse, they seemed to think I'd be doing them a favour at the same time as actually BUYING their product, while they have ZERO sales in most Asian countries. Got their logic mixed up.

2 quick points: Salmon from Alaska and Canada is a different species from that indigenous to Ireland and Scotland (actually a different genus, at the risk of sounding pedantic: our salmon is Salmo salar, the N. American continent has at least 6 different species of Ornohincus species.... sockeye, choho, chub salmon etc.) Also, the future of mass produced farmed salmon is Chile.... The have similar climatic conditions to NE Europe, but massively lower labor costs and far lower environmental standards/costs.

China is potentially the biggest market for all Irish produced food exports. Many small/medium companies are starting to realise that. But instead of working together, as usual, we are constantly competing amongst ourselves. There is a huge need for a company along the lines of the dairy board or enterprise Ireland to get involved to co ordinate export and exporters. But hopefully one run on commercial rather than semi state lines.

maninasia

skafish wrote: »

2 quick points: Salmon from Alaska and Canada is a different species from that indigenous to Ireland and Scotland (actually a different genus, at the risk of sounding pedantic: our salmon is Salmo salar, the N. American continent has at least 6 different species of Ornohincus species.... sockeye, choho, chub salmon etc.) Also, the future of mass produced farmed salmon is Chile.... The have similar climatic conditions to NE Europe, but massively lower labor costs and far lower environmental standards/costs.

China is potentially the biggest market for all Irish produced food exports. Many small/medium companies are starting to realise that. But instead of working together, as usual, we are constantly competing amongst ourselves. There is a huge need for a company along the lines of the dairy board or enterprise Ireland to get involved to co ordinate export and exporters. But hopefully one run on commercial rather than semi state lines.

The point I was making about the salmon was the origin of the salmon I can find on sale in Asia. I don't think the average consumer cares what species it is too much. Not once have I seen Irish salmon either wild caught or farmed, I'm aware that farming salmon is not a big industry in Ireland although there are moves to expand it. I know it will never be big like Chile salmon or Norway salmon but surely somebody should be able to market it better. Ireland could promote a different angle on things for a couple of percent of the market, not 0% of the market!

China is the single biggest potential market but it's not only China it's Korea, Japan, Taiwan, Singapore, Malaysia, Indonesia and others that have market potential that hasn't been realised. However one should realise that many countries food exporters are also focusing on these areas so Irish companies need to get the figleaf out of their asses and make a proper effort and spend some money too. You've also got to be willing to adapt the product to Asian tastes in some cases.

The Irish government does let things down by lack of embassies, trade offices and consular offices to promote 'brand Ireland' and associated activities, our competitors such as NZ, Aus, Belgium, Holland, Swiss etc all do this.

skafish

maninasia wrote: »

The point I was making about the salmon was the origin of the salmon I can find on sale in Asia. I don't think the average consumer cares what species it is too much. Not once have I seen Irish salmon either wild caught or farmed, I'm aware that farming salmon is not a big industry in Ireland although there are moves to expand it. I know it will never be big like Chile salmon or Norway salmon but surely somebody should be able to market it better. Ireland could promote a different angle on things for a couple of percent of the market, not 0% of the market!

China is the single biggest potential market but it's not only China it's Korea, Japan, Taiwan, Singapore, Malaysia, Indonesia and others that have market potential that hasn't been realised. However one should realise that many countries food exporters are also focusing on these areas so Irish companies need to get the figleaf out of their asses and make a proper effort and spend some money too. You've also got to be willing to adapt the product to Asian tastes in some cases.

The Irish government does let things down by lack of embassies, trade offices and consular offices to promote 'brand Ireland' and associated activities, our competitors such as NZ, Aus, Belgium, Holland, Swiss etc all do this.

While not wanting to get into a debate re salmon per sae, I agree with most of what you say.

However, exporting any foodstuff to China from Ireland (or any where else in Europe) takes a bit of effort to set up. See link below:
http://www.sfpa.ie/SeafoodSafety/ExportsHealthCertificates/ExportstoChina.aspx
On a positive note, a trade mission to China in 2012 has led to a number of companies actively engaging in negotiations and in a number of cases actual sales over the last few months.
It has also led to a joint venture between the Chinese Academy of Agricultural Sciences and Tagasc, which will, hopefully, open a few more export doors.
http://www.agriculture.gov.ie/press/pressreleases/2013/june/title,70649,en.html

Mind you, its not just in the far East that it is difficult to buy Irish products.
I was in Germany last week, and visited a local supermarket, out of curiosity.
Despite all the hype surrounding Board Bia and the Irish Dairy Board, the only dairy products of Irish origin I could find were Kerrygold butter and a type of Kerrygold cheese slices I've never seen before.
More disappointing to me personally was the fact that the only whiskey available was Tullamore Dew or Jamesion. At least 40 different varieties of Scotch and 5 or 6 different American "whiskeys".

realitykeeper

Bits_n_Bobs wrote: »

Spotted today that the IEA have decreased their exports growth by a whopping 5% (must be using the same economists as the dept of finance...). Is there any multiplier between export growth/contraction and GDP or is it horrendously complicated?

I think it was Hitler who said "If traded goods do not cross borders, armies will." However in order to trade, Ireland must compete. The state owned banks are hindering the country`s ability to compete because they need the workforce be in receipt of noncompetitive pay rates so they can pay their mortgages.

clairefontaine

Guinness isn't Irish anymore is it?

Also might have to do with the strength of the Euro.

Makes importing costly for other currencies.

Cookie_Monster

clairefontaine wrote: »

Guinness isn't Irish anymore is it?

sure is, the holding parent company is a multinational though

clairefontaine

Cookie_Monster wrote: »

sure is, the holding parent company is a multinational though

It's manufactured by Diagio. How is it still one of Ireland's exports?

maninasia

It's owned by the Diageo group, so it's not an Irish company, but it is very much an Irish brand and I think the James Gate and Irish operations are still the biggest breweries . They also brew Guinness in Malaysia and other places but it doesn't taste as good. Almost all of Ireland's whiskeys brands are also owned by multinationals, which I also have mixed feelings about, but again they are all distilled in Ireland and they do support expansion of the business even if they trade off the 'oirish' name.

Of course Guinness had been owned by an Anglo-Irish family since it's inception.

I expect many 100% Irish breweries to pop up in the next few years and if they are good I'll be an enthusiastic supporter, eh drinker, of their malty and hoppy beverages.

maninasia

http://www.irishexaminer.com/business/pharma-patent-cliff-continues-to-eat-into-countrys-export-performance-246377.html

The patent cliff continues to eat into Ireland’s export figures but on the plus side the country enjoyed an increase in the seasonally adjusted trade surplus.
Preliminary export and import figures published by the Central Statistics Office (CSO) for Aug 2013 show there was a massive 17% or €1.4bn decline in the value of Irish exports in Aug 2013 compared to the same month last year.

Merrion Economics chief economist, Alan McQuaid, said this was the effect of expiring patents on drugs such as Viagra and Lipitor which had been huge drivers of Irish export figures.

“Comparing August this year with Aug 2012, the value of exports decreased by €1,420m (17%). Organic chemicals (-€579m) and medical and pharmaceutical products (-€422m) were the main contributors to this decline.

“The expiry of patents regarding certain pharmaceutical products was clearly at play here,” he said.

Lazy analysis here.

So organic chemicals have dropped by a massive amount but surely they are not covered by patents? I'd like to see a breakdown of the medical and pharma figure too, since they mix the two together, really unhelpful.

kippy

Can anyone define what an "export" is, in the context of these types of reports?
(Maybe it's even defined in the report)