DUBLIN (Reuters) - Ireland’s economy could contract by more than 7% in 2020 and unemployment could soar to around 18% as a result of measures taken to slow the spread of the coronavirus, research showed on Thursday.
In its latest quarterly assessment, the Economic and Social Research Institute (ESRI), an independent think tank partly funded by Ireland’s finance department, said the current restrictions on economic life will lead to “a significant reversal” of Ireland’s recent economic trends.
Ireland’s GDP has outperformed everywhere in the EU each year since 2014, and before the onset of the virus the ESRI expected the economy to grow by up to 4% this year. It now expects a recession with output contracting by 7.1%.
The resulting pressure on the public finances results would mean a deficit of nearly 4.5% of GDP, after two years of small surpluses.
In addition, the think tank warned that unemployment is set to increase from 4.8% in February to around 18% by summer, falling back to just under 11% by the end of the year.
The research assumes that current restrictions on economic activity remain in place for a period of 12 weeks, and the return of domestic and international economic activity in the second part of the year.
“If this does not occur, then the results will be even more adverse for the domestic economy,” the researchers behind the assessment said.
Ireland banned all non-essential travel within the country and shut non-essential retail on Tuesday and put together a significant package of measures to support those already left unemployed and workers at risk of joining them.
The additional financial measures will cost an initial 3.7 billion euros over the next 12 weeks, on top of the 3 billion euros already committed to boost sick pay, fund the health service and offer assistance to businesses.
Reporting by Graham Fahy; Editing by Raissa Kasolowsky