Ireland's trade surplus dipped to a seven-year low in December on the back of a sharp decline in exports.

Exports fell to €6.2 billion in December on a seasonally adjusted basis, 17 per cent down on the previous month, and the lowest level since January 2000, with analysts blaming the increasing strength of the euro against both the dollar and sterling.

Imports were also down significantly in December to €4.9 billion after spiking to €5.6 billion in November. Overall, the seasonally adjusted trade surplus fell to €1.298 billion, its lowest level since July 2000.

Despite the weakening performance towards the end of the year, merchandise exports in 2007 were 2.4 per cent ahead of the previous year in value terms at €88.98 billion.

This represents a recovery from the 0.1 per cent growth in exports in 2006. Imports growth of 2.1 per cent last year was down on the 5.8 per cent recorded in the previous year.

A detailed breakdown for the first 11 months of the year shows that exports to the UK were 6.9 per cent ahead of the same period in 2006, while there was a 3.9 per cent rise in goods going to euro zone trading partners. However, the value of exports to the US fell 1.1 per cent.

Most of the gains were in the first half of the year. "It is quite clear now that the slowing US economy and the strength of the euro are starting to weigh negatively on Irish merchandise exports," said Bloxham economist Alan McQuaid.

Deirdre Ryan, an economist with Goodbody, noted that 90 per cent of the rise in imports over the first 11 months of last year was accounted for largely by the purchase of planes by Irish airlines.

Yesterday's figures cover only merchandise exports and take no account of services.