Tuesday, June 21, 2011

Imports on the rise – but in a good way

Today’s External Trade release shows that exports to March are up 8.5% on the year with imports showing a rise of 12.3% with the net effect of these leading to a rise of 4.4% in the balance of trade (though all of this is due to chemicals).  In the arithmetic of national accounts, imports are subtracted in the calculation that leads to GDP.  However, it is also important to look at the composition of those imports.

The CSO provide a useful table that gives a breakdown of imports by use. Click to enlarge

Imports by Use Table

Imports are up €1.4 billion on the year and there is annual growth in all the categories.  What is noteworthy is that capital and intermediate goods for production make up nearly two-thirds of total imports.

Of the €1.4 billion rise in imports, €0.3 billion is for capital goods for production and €0.6 billion is for intermediate goods for production.  The remaining €0.5 billion is for consumption goods.

On the whole, the rise in imports may subtract from GDP figures now but over the coming months as these capital goods and materials are put into use it will lead to an increase in economic activity and a likely increase in exports which will push GDP up.  Here is the same data in a graph.

Goods Imports by Use

The rise in the imports of production materials since the middle of 2010 is evident as well as a gradual recovery in imports for consumption.  The capital goods series is more volatile.

Here are a couple of notable import categories that are also showing increases.

1. Petrol

Petrol Imports

2. Cars

Imports of Road Vehicles

3.  And some goods involved in production

Imports by sub-category

After scratching around for the past two years, these categories have been showing some smalls signs of growing over the first three months of the year (though they are all well down on the peaks of 2006 and 2007 – see graph here).

1 comment:

  1. Yes, the big increase in imports was the first thing I noticed in today's release. Thanks very much for breaking down the data and putting it in graphical form. Hopefully the rise in imports presages a general recovery in the Irish economy. The level of imports has up until now reflected the overall collapse in output levels in the Irish economy. There recent rise should be reflected in the national accounts in the forthcoming quarters as we (hopefully) climb out of recession.