Ireland's exports contracted by 2 percent in the second quarter of the year, pulling the first half of the year's exports down by 1.7 billion euros, according to industry figures on Thursday.
The Irish Exporters Association (IEA) said the contraction brought the value of exports for the six months of the year to 88.6 billion euros, a massive drop on the same period of last year.
The merchandise sector took the main brunt of the fall in export demand, and contracted by 2.9 billion euros or 6.4 percent, mainly due to the loss in the value of pharmaceutical exports associated with the end of their patent protection on a range of block buster drugs manufactured in Ireland
However, amid the general fall in manufacturing exports, the agri-food and drinks sector continued on its growth path and increased export sales by a strong 8 percent.
Services exports managed to grow by just under 3 percent in the first six months of the year, which was a sharp contraction from the 9 percent growth last year.
IEA Chief Executive John Whelan attributed the contractions to the failure of the European economies to emerge from the recession of recent years.
"The first six months of the year have been more difficult than expected, with a heavier than expected fall in merchandise exports and an unexpected slowdown in our services exports," he said.
"Both sectors were heavily affected by the failure of the European economies to emerge from the recession of recent years. The EU is where we sell 57 percent of our agri-food and manufactured goods and also where we sell 64 percent of our services. Failure of the EU economies will always create major problems for our exporters," he added.
The IEA projects a contraction in exports of 1.6 percent for the full year 2013, which assumes a return to some growth in the Eurozone economies in the second half of 2013.
This is less than the forecast growth for 2013 (IEA prior forecast was 3.3 percent growth) and is driven to a large extent by appreciably weaker demand in the key export markets of the EU and US, and the lack of any extensive expansion of exports to the fast growing emerging markets particularly in Asia and Africa.