There is a lot of uncertainty around the welfare of Ireland’s economy due to the impact of the COVID-19 pandemic. These predictions could provide some clarity on the forecasts regarding the positive and negative effects on the economy for 2021 and the remainder of 2020.
COVID-19 to cause an estimated 8% contraction in Ireland’s economy for 2020
According to the European Commissions in the latest economic forecast, the Irish economy is estimated to contract by 8% in 2020 and expand by 6% in 2021 due to the Coronavirus pandemic. This economic uncertainty can also be as a result of Brexit and international taxation fluctuations. Ireland had a strong economic footing at the beginning of 2020. The pandemic has altered the country’s economic activity drastically, from a 5.5% GDP growth performance in 2019. The Commissions suggested that the Exchequer current expenditure will rise to around 2% of GDP. This is to support healthcare, provide welfare payments as well as subside wages to protect jobs. This will affect the Irish debt-to-GDP ratio to reach 66.5% in 2020 and 66.75% in 2021.
ESRI states consumer-facing workers face the risk of long-term unemployment.
Workers in consumer-facing industries such as personal services, accommodation, and food and beverage are most at risk of unemployment once the State supports are removed. Using a combination of administrative and Labour Force Survey (LFS) data, the research identifies Pandemic Unemployment Payment claimants that have the greatest risk of falling into long-term unemployment, officially those without a job for over 12 months.
Ireland’s economy well placed to recover from COVID-19
It was reported by Davy stockbrokers that although the COVID-19 outbreaks caused many downfalls, the Irish economy should be stronger relative to other European countries. Over 50% of Irish SMEs now have no bank debt compared to the 25% debt recorded in 2012. Davy said that although many SMEs may find themselves in financial distress due to the pandemic, the macroprudential and fiscal policy should help support incomes for employees.
IMF states Ireland’s economy should return to growth in 2021
The International Monetary Fund forecasted Ireland’s economy to decline by 6.8% in GDP terms this year. The Government should start shifting policies towards supporting demand. Incentives should be put in place to get people back to work as restrictions ease. Fiscal stimulus should be coordinated to increase the benefit for all economies and assist in returning the country into growth in 2021.
Ireland’s digital marketing industry should survive the COVID-19 pandemic.
The entire advertising industry is facing a challenging time due to the current pandemic. The IAB Ireland is very conscious about this situation according to Suzanne McElligott, CEO. The COVID-19 pandemic has resulted in an increase of 49% in users since social isolation. The IAB predicts that the digital advertising industry will rebound in the second half of 2020, as it is an agile and well-connected market which makes it a collaborative industry with the Coronavirus pandemic restrictions.
Risks are still a reality to most businesses in Ireland due to this economic uncertainty. The above are only predictions and they are based on when the pandemic will subside. It is better to remain hopeful but still prepared for more tough times ahead.
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