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Explaining Ireland's Trade Balance

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The balance of trade is the difference between the value of all the goods and services a country exports and the goods and services it imports over a certain period. In this publication, we take two measurements for Ireland’s trade in goods and services based on data available in the CSO. One measurement uses a goods balance based largely on the physical movement of goods across borders; the other calculates Ireland’s goods balance based on a change of ownership. The services trade balance is the same for both measurements1. The two measurements, denoted Ireland's traditional and total trade balances in this publication, tend to follow the same trend except for 2014 and 2015 when they diverged. A sharp divergence in 2015 opened up a large gap between the two trade balances and a large gap was maintained in 2016 and 2017. As a result, Ireland’s trade balance with individual countries can vary significantly across the two measurements.

X-axis labelTotal Trade BalanceTraditional Trade Balance
China19.3871.40891860900697
Belgium18.22111.9502758363129
Germany14.3689.92100680003813
United Kingdom10.2527.37896751479053
Japan9.7055.98097914616793
US-0.604-12.4864603300145
Luxembourg-3.548-3.55368144371753
Bermuda-7.102-2.35642782570008
Netherlands-18.522-13.6685819523595
All other countries68.67141.575

What are Ireland’s Total Exports and Imports?

Figure 2 below shows Ireland’s exports and imports of all goods and services traded from 2007 to 2017, along with Ireland's total trade balance (i.e. exports less imports) over the same period. In 2017, Ireland generated a trade surplus of €89bn, its largest on record, with the rest of the world.

The trade balance shown in Figure 2 and Table 1 is recorded in Ireland’s Balance of International Payments and National Accounts, and is used in calculating economic growth or GDP. The trade data is published on a quarterly basis and is compiled from customs data and business surveys.

Total Exports Total Imports Total Trade Balance
2007159.305142.99416.311
2008157.942141.78516.157
2009158.596135.67622.92
2010172.797144.92527.872
2011177.303145.14332.16
2012183.013152.39930.614
2013186.244152.45633.788
2014214.35179.16435.186
2015320.565244.88675.679
2016328.235285.88242.353
2017352.556263.26889.288
Table 1: Ireland’s Total Exports, Total Imports and Total Trade Balance, 2007-2017€billion
YearTotal Exports of Goods and ServicesTotal Imports of Goods and ServicesTotal Trade Balance
200715914316
200815814216
200915913623
201017314528
201117714532
201218315231
201318615234
201421417935
201532124576
201632828642
201735326389

Get the Data: StatBank N1705T05

The data in Figure 2 and Table 1 provides us with a general overview of the extent to which the Irish economy trades with the rest of the world. Within these trade flows, distinctions are made between various physical products or goods, and non-physical services. The primary data sources for goods and services traded internationally are introduced below.

What Goods do we Trade on a Cross-Border Basis?

Figures 3 and 4 present the composition of goods Ireland exports and imports based largely2 on the physical movement of goods across its borders. These movements of goods are published monthly by the CSO.

In 2017, Chemicals and Related Products accounted for 55% of Ireland’s €123bn of goods exports (see Figure 3). Pharmaceutical products dominate the Chemicals and Related Products goods category.

OtherMineral Fuels, Lubricants, Related MaterialsMiscellaneous ArticlesChemicals and Related Products, n.e.s.Food and Live Animals Manufactured Goods classified chiefly by material Machinery and Transport Equipment
20075.75420.68648.489443.06937.60291.817823.1597
20085.3240.83229.4144.22557.08521.660719.9655
20095.36750.59489.70249.31496.27991.24515.0814
20106.02981.027610.878453.23667.00321.448811.2994
20113.70961.353710.846256.03077.87441.657811.7182
20124.03011.646511.40155.04488.13231.689811.5622
20134.13180.822711.529250.3948.73381.71111.859
20144.25130.846512.627651.5699.35051.870612.1004
20154.32030.772914.298864.22419.87782.105116.8083
20163.91010.691214.645366.385310.09642.143721.4202
20174.27670.992614.873767.829111.37452.277421.0873

Get the Data: StatBank TSA06

Machinery and Transport Equipment account for 41% or €32bn of goods imports in 2017 (see Figure 4). Aircraft, including those purchased by resident aircraft operational leasing companies, accounts for a large component of Ireland’s Machinery and Transport Equipment imports.

OtherMineral Fuels, Lubricants, Related MaterialsMiscellaneous ArticlesChemicals and Related Products, n.e.s.Food and Live Animals Manufactured Goods classified chiefly by material Machinery and Transport Equipment
20074.87485.72827.61018.12664.59296.082328.9244
20084.67086.59446.86068.28214.68115.456822.7898
20094.20964.44536.12237.37194.41693.427818.2095
20104.06225.60166.15258.75814.57893.498816.0425
20112.95286.94576.013610.41545.01843.711917.9774
20122.94987.15976.068610.26515.58933.712820.4339
20133.03616.88616.119410.87276.0333.876418.9634
20143.33746.47726.898311.44346.18944.232123.5797
20153.58745.10438.166213.97786.68684.697727.8908
20164.1183.77598.252514.96326.6894.751231.5808
20174.34584.76998.305917.4847.18325.057732.1244

Get the Data: StatBank TSA06

What Services do we Trade?

Figures 5 and 6 show the composition of Ireland’s total services exports and imports from 2007 to 2017. Unlike the goods data presented in the previous section, data on internationally traded services is published quarterly by the CSO. The main source for the data is statutory surveys completed by enterprises resident in Ireland.

In 2017, Computer Services was Ireland’s largest export category at €69.3bn or 43% of total service exports (see Figure 5).

Transport Tourism and Travel, Insurance Related MaterialsInsuranceFinancial ServicesComputer Services Royalties/LicencesBusiness Services Other Services
20072.9084.4268.7997.4421.7260.86520.5711.226
20083.014.2878.1556.59523.8761.01720.0470.962
20093.0453.5557.35.79424.3521.21621.3191.016
20103.6573.1067.9656.32627.8892.19222.1511.026
20114.3523.018.0576.59431.4133.60323.3691.073
20124.7723.0228.41910.09431.6183.8815.9653.38
20134.8283.378.4399.76935.7754.38817.3983.548
20145.1933.6568.72310.43241.9885.24220.6943.962
20156.5534.31510.30912.48750.3987.32523.0315.822
20167.2254.6859.29613.28758.0818.05230.0934.359
20178.0864.9729.91315.30969.3229.60837.0755.417

Get the Data: StatBank BPA03

Figure 6 shows that in 2017, Business Services, at €72.9bn, was the largest import category followed by Royalties/Licences at €66.6bn. When combined, these two import categories accounted for 78% of Ireland’s total service imports of €178bn in 2017. Business Services includes research and development costs along with other intergroup costs of multinationals.

Transport Tourism and Travel, Insurance Related MaterialsInsuranceFinancial ServicesComputer Services Royalties/LicencesBusiness Services Other Services
20072.0676.37.1334.6350.6618.62128.6730.993
20081.9087.0466.2954.4530.70724.27529.71.232
20091.615.6026.1964.2850.62525.14829.8761.16
20101.635.3586.2724.5130.65928.2632.9461.311
20111.6454.8175.9864.7060.50229.36134.9821.17
20121.5474.6095.9536.3660.35729.72836.0232.839
20131.5874.6695.3386.7880.48231.73235.1942.438
20142.1714.8265.7037.6320.6443.26738.4892.71
20152.7195.1437.11910.2831.12863.7664.4793.326
20162.6895.6236.69511.5491.38269.20296.0815.583
20172.545.8147.07913.2463.35466.58872.8686.564

Get the data:  Statbank BPA03

What is Ireland’s Trade Balance?

A version of Ireland’s trade balance with the rest of the world can be calculated using the goods export and import data in Figures 3 and 4, and the services trade data in Figures 5 and 6 above. For simplicity, we will denote this measurement as Ireland’s traditional trade balance.

However, Ireland’s final or total trade balance (see Figure 2) includes a number of adjustments to this traditional balance. These adjustments are necessary to provide consistency between data on cross-border movements of goods and corresponding purchases and sales reported by businesses resident in Ireland. The adjustments produce a goods trade balance that reflects those Irish exports and imports that result in a change of ownership or, in other words, a commercial exchange. In practice, this means taking the traditional trade balance and removing cross-border goods exports and imports where no change of ownership occurs, and including flows where goods change ownership without physically crossing the Irish border. Further details on these adjustments are available at Explaining Goods Exports and Imports 2012-2016.

These adjustments have become necessary with the increasing trend of globalisation, whereby products or goods move across borders for further processing or transformation while remaining in the ownership of one enterprise. Taking account of the ownership of Global Value Chains3 is an important feature in understanding Ireland’s total trade balance.

It is this total trade balance that is used in calculating Ireland’s GDP. It also potentially has a relationship with Government Revenues as the data relates to sales and purchases reported by businesses resident in Ireland. Notwithstanding this, data on cross-border goods exports and imports are also important. For example, these physical flows are relevant to national employment and domestic consumption.

Figure 7 below compares Ireland’s traditional and total trade balances. In 2013, the relationship between the two measurements for Ireland’s trade balance began to change. That is, Ireland’s total trade balance began to exceed its traditional balance.

Figure 7 also illustrates the important increase in the total trade balance in 2015 and the large divergence between these measurement bases that year.

Total Trade BalanceTraditional Trade Balance
200716.31123.5194
200816.15721.4975
200922.9232.4812
201027.87235.5892
201132.1638.4554
201230.61431.0475
201333.78832.6754
201435.18624.9144
201575.6794.58129999999999
201642.353-18.5714
201789.28825.087
Table 2: Ireland's Trade Balance, 2007-2017€billion
YearExports of Goods and ServicesImports of Goods and ServicesTrade Balance
 TraditionalTotalTraditionalTotalTraditionalTotal
20071591591351432416
20081561581351422116
20091551591231363223
20101651731301453628
20111751771361453832
20121751831441523131
20131771861441523334
20141932141681792535
2015233321228245576
2016254328273286-1942
20172823532572632589

Get the DataStatBank TSA01 BPA03, N1705T05

Figures 8 and 9 show the contribution of services and traditional goods trade to Ireland’s total exports and imports respectively. The figures demonstrate services exports are nearly as valuable as goods exports, and services imports have grown to twice the value of goods imports in 2017.

Figures 8 and 9 also demonstrate the extent to which adjustments are made to traditional export and import data to arrive at total values. In recent years, the adjustments made to exports are not only positive for the trade balance but also very large (see Figure 8). This is further explained in the following section.

Traditional Goods ExportsServices Exports Total Exports
200790.579767.96159.305
200888.503167.947157.942
200987.585567.602158.596
201090.923874.311172.797
201193.190681.468177.303
201293.506781.145183.013
201389.181587.511186.244
201492.615999.889214.35
2015112.4073120.238320.565
2016119.2922135.076328.235
2017122.7113159.701352.556
Traditional Goods ImportsServices ImportsTotal Imports
200765.939369.081142.994
200859.335675.617141.785
200948.203374.503135.676
201048.694680.951144.925
201153.035283.168145.143
201256.179287.425152.399
201355.787188.23152.456
201462.1575105.433179.164
201570.111157.953244.886
201674.1306198.809285.882
201779.2709178.054263.268

What is the effect of a change in ownership on our measurement?

Table 3 illustrates total goods exports grew by 75% from €114.5bn in 2014 to €200bn in 2015. Much of this growth is a result of changes in ownership which did not involve the goods crossing the Irish border. In other words, goods owned by companies resident in Ireland that are processed or manufactured abroad and subsequently sold onward without returning to Ireland.  

This growth in goods exports is a contributory factor to the large divergence between the two measured trade balances that occurred in 2015.  The 50% increase in service imports in 2015 (see Figure 6) was also a major factor in the divergence, causing the traditional trade balance to fall from €25bn in 2014 to €5bn in 2015 (see Table 2).  The gap between the two trade balances remained large in 2016 and 2017 (see Figure 7).

Table 3: Breakdown of Irish Exports and Imports of Goods and Services, 2014-2017  €million
Measurement  2014 2015 2016 2017
Traditional Goods Trade Exports 92,616 112,407 119,292 122,711
(i.e. Trade derived from cross-border movements)Imports62,158 70,111 74,131 79,303
 
Change of Ownership AdjustmentsExports21,845 87,920 73,868 70,143
 Imports 11,573 16,822 12,941 5,911
Total Goods/Merchandise Trade Exports 114,461 200,327 193,160 192,854
(i.e. Trade on an Ownership Basis)Imports 73,730 86,933 87,072 85,214
 
Total ServicesExports 99,889 120,238 135,076 159,701
 Imports 105,433 157,953 198,809 178,054
Total Goods and ServicesExports 214,350 320,565 328,236 352,555
 Imports  179,163 244,886 285,881 263,268
Total Trade Balance  35,187 75,679 42,355 89,287

Who do we Trade with?  

Ireland’s primary trading partners in 2017 are shown in Tables 4 and 5 below.

In 2017, the US and UK were Ireland’s most significant trading partners, both in terms of exports and imports. Combined these two countries accounted for 31% of Ireland’s total exports and 38% of Ireland’s total imports.

Ireland’s total exports to the US are effectively the same as the value of its total US imports while its total exports to the UK exceed its UK imports by €10.3bn. This trade surplus with the UK represents 11% of Ireland’s total trade surplus with the world.

Following on from Figures 8 and 9, Tables 4 and 54 quantify the size of the adjustments made to traditional trade data for a number of countries. Of note is the €17bn adjustment to Ireland’s goods exports to China. Figures 10 and 11 plot the composition of Ireland’s exports and imports with its significant trading partners.

Table 4: Top Destinations of Irish Exports 2017 €million
 
CountryTraditional Goods ExportsChange of Ownership Adjustments Total Goods ExportsTotal Services ExportsTotal Exports
United States (US)33,2848,97742,26118,15860,419
United Kingdom (GB)16,4557,00923,46426,26649,730
Germany (DE)10,0995,04015,13911,93827,077
China (CN)4,37816,93921,3174,04225,359
Belgium (BE)13,3336,60819,9412,92022,861
France (FR)5,3482,8168,1646,69014,854
Singapore (SG)6859,2609,9453,72413,669
Japan (JP)2,6173,1825,7995,74311,542
Italy (IT)2,6202,0374,6576,47011,127
Switzerland (CH)6,2129657,1773,72710,904
Spain (ES)2,5961,7324,3283,6938,021
Netherlands (NL)5,929-3,7672,1624,9837,145
All other countries19,1549,34528,50061,34789,847
 
EU Total62,20122,54184,74274,074158,816
Non-EU Total60,51047,601108,11185,627193,739
 
Total Exports122,71170,142192,854159,701352,555
Traditional Goods ExportsOwnership Adjustments to Traditional Goods ExportsTotal Services Exports
US33.2837137685028.97728623149818.158
GB16.45538508820497.0086149117951126.266
DE10.09923919747495.0397608025250511.938
CN4.37833366516.9386663354.042
BE13.33307696048796.607923039512082.92
FR5.347905680850782.816094319149226.69
SG0.6848756469.2601243543.724
JP2.617183237508773.181816762491235.743
IT2.620268218193922.036731781806086.47
CH6.2119517840.9650482160000013.727
ES2.596387450744831.731612549255173.693
NL5.92921595842835-3.767215958428354.983
Other19.15376010599079.3452398940092961.347
Table 5: Top Countries of Origin for Irish Imports 2017   €million
 
CountryTraditional Goods ImportsChange of Ownership Adjustments Total Goods ImportsTotal Services ImportsTotal Imports
United States (US)16,368-2,90513,46347,56061,023
United Kingdom (GB)18,8684,13623,00416,47439,478
Netherlands (NL)2,4341,0863,52022,14725,667
Cayman Islands (KY)0****
France (FR)10,500-34810,1522,99513,147
Germany (DE)6,8905937,4835,22612,709
Bahamas (BS)8****
China (CN)4,424-1,0393,3852,5875,972
Italy (IT)1,5961,0302,6263,2545,880
Singapore (SG)309****
Belgium (BE)1,3943371,7312,9094,640
Switzerland (CH)602-2323704,0794,449
All other countries15,9094,01819,93643,88863,824
 
EU Total46,3837,48053,83162,192116,023
Non-EU Total32,920-1,57831,383115,862147,245
 
Total 79,3035,90285,214178,054263,268
* Suppressed for confidentiality reasons but included in the totals.
Traditional Goods ImportsOwnership Adjustments to Traditional Goods ImportsTotal Services Imports
US16.3681740985165-2.9051740985164847.56
GB18.86841757341444.1355824265856416.474
NL2.433797910787821.0862020892121822.147
FR10.5001580896269-0.348158089626892.995
DE6.890232397436820.5927676025631825.226
CN4.42441505599303-1.039415055993032.587
IT1.595774929434161.030225070565843.254
BE1.393801124174980.3371988758250222.909
CH0.602016207621866-0.2320162076218664.079
Other15.90930429112874.0176957088712843.888

The figures for imports from the Cayman Islands (KY), Bahamas (BS) and Singapore (SG) have been omitted from Figure 11 for confidentiality reasons. However, as Table 4 shows, these countries are significant sources of imports into Ireland.

In Figures 12 and 13, we show the relationship between exports and imports for each key trading partner. The difference between the figures is the ownership adjustment to account for Global Value Chains.

X-axis labelTraditional ExportsTraditional Imports
United States5164
United Kingdom4335
Germany2212
Belgium164
France1214
Netherlands1125
Switzerland105
Italy95
China87
Japan82
Total Exports Total Imports
United States 6061
United Kingdom 5039
Germany2713
China256
Belgium 235
France 1513
Japan122
Italy 116
Switzerland114
Netherlands 726

 

Ireland's Trade Balance by Geographic Location 

Table 6: Trade Balance by Country 2017€million
CountryTraditional Trade BalanceTotal Trade Balance
China1,40919,387
Belgium11,95018,221
Germany9,92114,368
United Kingdom7,37910,252
Japan5,9819,705
US-12,486-604
Luxembourg-3,554-3,548
Bahamas**
Bermuda-2,356-7,102
Cayman Islands**
Netherlands-13,669-18,522
Other countries41,57568,671
 
EU Total27,68042,781
Non-EU Total-2,62146,517
Total25,05989,298
* Suppressed for confidentiality reasons but included in the totals.

Get the Data: StatBank BPA05Statistical Yearbook of Ireland 2018Trade Statistics December 2017 (PDF 2,066KB)

Some of the impact of globalisation is reflected in the variation of trade balance measurements for individual countries (see Table 6). For example, in 2017 China was the country with which Ireland had the largest trade surplus at €19.4bn. This is more than ten times the size of Ireland’s traditional trade balance with China for which the goods balance is based predominantly on cross-border flows only.

Ireland’s largest trade deficit is with the Netherlands at nearly €19bn and is driven by €22bn of services imports (see Table 5). This deficit shrinks to €13.7bn if we contain the goods balance to largely customs based data. This difference in the two trade balances is driven by the €3.8bn negative adjustment to goods exports to the Netherlands (see Table 4). The negative adjustment suggests that a lot of physical flows of goods from Ireland to the Netherlands do not result in a change of ownership.

To conclude, in this note two measurements for Ireland’s trade balance have been calculated based on data published by the CSO. The difference between the two trade balances is explained by how Ireland’s exports and imports of goods are derived. One measurement uses a goods balance based largely on the physical movement of goods across borders; the other calculates Ireland’s goods balance based on a change of ownership. Since 2015 the difference between the values of the two trade balances has grown considerably. As a result, Ireland’s trade balance with individuals countries can vary significantly across the two measurements.

 


The appropriate time for recording transactions in services is when they are delivered or received, the accrual basis.


In practice, this means that an imported or exported good is only counted in the data when the good crosses the Irish border. The exception to this is the inclusion of the acquisition and divestment of aircraft by resident aircraft leasing companies even when the aircraft does not cross Ireland’s border. See Moving to a Transfer of Economic Ownership Basis for Trade in Aircraft for further detail.


Companies used to make things primarily in one country. Today, a single finished product often results from manufacturing and assembly in multiple countries, with each step in the process adding value to the end product. 


Values for Total Services Imports and Exports for the US and France in the database BPA05: Exports and Imports of Services by Geographic Location, Year and Statistic differ from those in Tables 4 and 5. The values differ by less than 2%. In the database, the US includes Puerto Rico and France includes Monaco, French Guyana, Martinique, Guadeloupe, Mayotte, Reunion, Saint Barthelemy Saint Martin and Saint Pierre.

 

Many thanks to Paul McElvaney for his earlier work on this Release. 

  • Caren Crowley    (+353) 1 498 4290

  • Annette Hayes   (+353) 1 498 4319

  • Christopher Sibley    (+353) 1 498 4305

  • Email: bop@cso.ie