Ireland sees GDP fall of just 2.5% in 2020, slower rebound in 2021

FILE PHOTO: Construction cranes are seen in the Irish Financial Services Centre in Dublin, Ireland April 24, 2017. REUTERS/Clodagh Kilcoyne/File Photo

DUBLIN (Reuters) - Irish gross domestic product is set to fall by just 2.5% this year and not the 10.5% estimated in April, Ireland’s finance ministry forecast on Tuesday, after the economy entered a far shallower recession than most of the euro zone.

While Ireland’s large multinational sector shielded its state finances from the worst of the COVID-19 crisis, the unemployment rate is still set to average almost 16% this year and then drop to 10.7% during 2021, the updated forecasts showed.

Modified domestic demand, a measure that strips out some of the ways large multinationals can distort Irish GDP, is forecast to fall by a steeper 6.5% in 2020, still far better than the 15.1% seen in April. The rebound in GDP and modified domestic demand in 2021 will not be as sharp as previously forecast.

Reporting by Padraic Halpin and Conor Humphries; Editing by Gareth Jones