‘Ireland faces record recession’

29 May, 2020 12:00 AM printer

DUBLIN: Ireland is facing its deepest ever recession as the coronavirus lockdown devastates jobs and strains the public finances, a think tank said Thursday.

A report by Ireland's Economic and Social Research Institute predicts the nation's gross domestic product (GDP) will decline 12.4 percent this year.

That was the "most likely" scenario under a government plan to lift the lockdown in August but with the economy struggling to return to pre-pandemic levels owing to physical distancing measures, ESRI said.

A more modest scenario predicting a vigorous recovery after lockdown would still see GDP shrink 8.6 percent, whilst a second wave of coronavirus infections could cause output plunge 17.1 percent.

"Regardless of the scenario, the Irish economy is set to experience the largest annual decline in its history," an ESRI statement said. "All aspects of the economy will be considerably affected with significant declines in consumption, investment and exports of goods and services," it added. Ireland's unemployment rate soared to 28 percent in April, almost double the figure following the 2008 global financial crisis that led to a huge international bailout of the eurozone member state.

According to ESRI's most-likely scenario, unemployment is set to remain above 17 percent in 2020.

"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.

Meanwhile "the unprecedented increase in public expenditure to combat the virus, coupled with the loss in revenue from the fall in economic activity" will bring the (public) deficit to more than 27 billion euros ($30 billion), or nine percent of GDP.

"The financing of such large deficits will come into sharp focus in the months ahead and hard choices will have to be made," ESRI said.