In its second economic quarterly of 2020, the Economic and Social Research Institute has warned that the Covid-19 global pandemic and the subsequent lockdown has been an unprecedented shock to the Irish economy with unemployment expected to average around 17% for the year.
The think tank predicts the Republic’s GPD will shrink by a staggering 12.4% this year, however, a more optimistic forecast based on a quicker reopening of the economy and rapid recovery would see the national output shrink by only 8.6%, still a dramatic recession.
A doomsday scenario would be a second outbreak which could see the GDP fall by a catastrophic 17.1%.
Any of these scenarios will mean the Irish economy will experience the largest single decline in GDP in the history of the state.
“The scale of the shock that we have faced is completely unprecedented and without equivalent in modern economic times,” said the report’s co-author Conor O’Toole.
The numbers reflect a similar trend across the world with even the EU’s largest financial powerhouse and hegemon, Germany, expecting to see its economy shrink by as much as 6.6% by end of year.
Large companies and small businesses alike are reducing their employment roll in Ireland social distancing measures are likely to deal an unimaginable blow to the country’s pub industry, a massive employer which was already struggling before the lockdown.
To compound this dire situation, as Irish people find themselves with less or no work and economy shrinks significantly, the likelihood of a Green party seat in a government coalition with Fine Gael and Fianna Fail means the cost of fuelling your car or heating your home will continue to rise dramatically.
The ESRI however, have encouraged the government to invest in social housing and retrofitting homes to stimulate the economy as the downturn may afford them an opportunity to bridge the gap between the underlying demand for homes and the supply. They believe Ireland’s economy will recover but will take a short time.
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