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Ireland's Current Account with the US

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Ireland’s current account with the US is built on three main components; trade of merchandise, trade of services and primary income inflows and outflows from investment. The following research note will analyse and highlight key aspects and trends arising from Ireland's trade of merchandise, services and income with the US between the years 2012 and 2018. Figure 1.1 below depicts these three main components and there are two clear trends: (a) Ireland’s large trade surplus in merchandise with the US and (b) Ireland’s large trade deficit in services with the US. The large difference between net merchandise and net services grew significantly between 2012 and 2018 and this was primarily caused by large increases in the exports of pharmaceutical goods and large outflows of payments for the import of research & development services by multinational corporations. Despite the peak of €8.3bn in Ireland's trade balance with the US in 2018, Ireland's current account with the US stands at €1.7bn due to a significant deficit in the income balance caused by large outflows of income from direct investment.

MerchandiseServicesIncomeCurrent Account Balance with US
201211.025531186-17.319942828-3.323963284-9.618374926
201312.168101222-14.093751503-0.631112744-2.556763025
201417.954294211-17.375467337-0.1140086110.464818263
201534.258515181-27.5993186741.0106480517.669844558
201630.810616324-34.920456111.967503749-2.142336037
201728.137971595-29.74837745-6.834555677-8.444961532
201834.480818975-26.216763426-6.5859104541.678145095

Source publication: International Trade in Services 2018

Get the data: StatBank (BPA04)

Key Findings from Ireland's Current Account with the US – Merchandise, Services and Income

  • Exports of pharmaceutical goods were €25.8bn in 2018 and made up 66% of international trade exports to the US.
  • Research & development (R&D) services imports were €13.9bn in 2018 and made up 29.5% of total imports of services from the US.
  • Profit outflows to the US from direct investment into Ireland were €9.6bn in 2017 (an increase of €7.1bn from 2016) and €9.9bn in 2018.
  • Profit inflows as a result of Irish funds investing in US portfolios were €16.3bn in 2018 (an increase of €2.1bn from 2017).

Figure 1.1 above depicts the fluctuations in Ireland’s current account balance with the US. In 2012, the current account deficit with the US was €9.6bn (the lowest in the series examined). After 2012 the balance increased, reaching a peak surplus of €7.7bn in 2015. The balance decline in 2016 and 2017 was largely driven by an increase in the import of services, up €8.3bn to €49.5bn in 2016 and due to increased income outflows, up €10.6bn to €25.9bn in 2017. However, in 2018 this balance decline reversed mainly due to the exports of goods, which were up €9.1bn to €52.2bn. This produced a positive trade balance of €8.3bn (the highest in the series examined) and a current account surplus of €1.7bn despite an income deficit of €6.6bn in the same year.

Total ExportsTotal ImportsTrade Balance
201229.29845074735.592862389-6.294411642
201330.26006547232.185715753-1.925650281
201436.77334670536.1945198310.578826874
201561.57528464554.9160881386.659196507
201661.64213981865.751979604-4.109839786
201760.79406861462.404474469-1.610405855
201873.08191138664.8178558378.264055549

Figure 1.2 shows how the trade balance with the US fluctuated around zero between 2012 and 2018. The trade balance peaked in 2018 and this positive change from a deficit of €1.6bn in 2017 was largely driven by increases in the exports of pharmaceutical products (international trade).

Table 1.1 Ireland’s Total Exports, Total Imports and Total Trade Balance with the US, 2012-2018€ billion
 Total Exports of Goods and ServicesTotal Imports of Goods and ServicesTrade Balance
201229.335.6-6.3
201330.332.2-1.9
201436.836.20.6
201561.654.96.7
201661.665.8-4.1
201760.862.4-1.6
201873.164.88.3

Source publication: International Accounts Q2 2019

The US was Ireland’s largest trading partner outside of the EU28 in 2018, accounting for 19% (€92.7bn) of total current account inflows and 20% (€91.0bn) of total current account outflows. In comparison, the UK accounted for 15% (€71.8bn) of total current account inflows and 17% (€76.9bn) of total current account outflows. This makes the US a more significant trading partner with Ireland than the UK in terms of value of trade.

Inflows
US19.1
UK14.8
Rest of
World
66.1
Outflows
US20.2
UK17.1
Rest of
World
62.7
Total InflowsTotal OutflowsUS InflowsUS Outflows
2012244.3249692250.25839270742.4820686652.100443586
2013245.613092344242.8252569742.94642988445.503192909
2014280.015343752277.92229476650.67952051350.21470225
2015385.036441519373.48068787877.60382660169.933982043
2016403.085847605414.45827896978.86677293381.00910897
2017444.439229812442.98082400979.86486427788.309825809
2018484.47698163450.18436552892.67986621291.001721117

Source publication: International Accounts Q2 2019

Figure 1.5 illustrates Ireland’s increasing trade with the US. Inflows from trade with the US increase after 2015, driven by exports of merchandise.

US InflowsUS OutflowsUK InflowsUK Outflows
201242.4820686652.10044358643.15150.521
201342.94642988445.50319290940.83348.799
201450.67952051350.2147022547.20757.33
201577.60382660169.93398204357.67861.018
201678.86677293381.0091089763.41564.036
201779.86486427788.30982580969.35368.528
201892.67986621291.00172111771.76176.882

Figure 1.6 shows both US and UK current account inflows and outflows. While there is a clear increasing trend in trade with the US and the UK, it is evident that growth in trade with the US has surpassed trade with the UK. Inflows and outflows from both partners move steadily until US inflows and outflows surpass the UK in 2015.

Table 1.2 below provides a detailed breakdown containing the relevant figures regarding Ireland's current account with the US.

Show Table: Table 1.2 Current Account with the US


Next chapter >> Trade of Merchandise