Covid-19 triggered ‘severe’ economic shock

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An economic collapse of 25% could hit Ireland over the next three months, according to Central Bank’s Quarterly Bulletin. RTE further reports a shrink of 3.8% of GDP this year and an unemployment rate of 25%.

 

The Central Bank has said Covid-19 has “triggered an extremely severe economic shock”, which is fundamentally different from anything the economy has been through before.

In its Quarterly Bulletin, the bank said the economy could shrink by 8.3% of GDP this year and the unemployment rate could peak at 25% in the coming months.

Over the next three months, it believes the economy here could collapse by 25%.

It has pencilled in a partial recovery later in the year but this, it said, is highly conditional and the risks to its forecasts are on the downside.

The path ahead for the economy, it said, depends on the path of the virus both here and abroad.

The Central Bank is predicting between 450,000 and 500,000 jobs will be lost, most in the next couple of months.

Some of this will be temporary but it has pencilled in unemployment to be still above 10% at the end of the year.

It is forecasting a deficit in the public finances this year of €19.6 billion, down from an expected surplus of €2.2bn.

It said the reduction in economic output this year will be greater than any year during the financial crisis.

The Central Bank also revised down its estimate of house completions for this year from 26,000 to 16,000.

Meanwhile, the Minister for Finance has said that the scale of the economic challenge Ireland faces due to the Covid-19 crisis depends on “how successful we are” in dealing with the public health emergency we face.

Paschal Donohoe said that “we can and we will build a new Irish economy” by borrowing to ensure jobs and incomes can be recovered.

Speaking on RTÉ’s Morning Ireland, Minister Donohoe said that the Central Bank forecasts are “possible scenarios” but emphasised that Ireland’s credit worthiness is high and “we have demonstrated our ability to bring the public finances into a very good condition”.

He said that our diverse economy, our credit worthiness and the “lack of a private sector bubble that we had a decade ago” are invaluable in building a new Irish economy “once we have broken the chains on Covid-19”.

Full article available on RTE

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