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Global economies have been devastated by the deadly virus, as governments have had to impose strict lockdowns. The drastic measures have led to huge falls in GDP, as well as seeing millions of workers lose their jobs. Now a report by a leading Irish think tank is predicting a particularly severe recession for the Republic of Ireland.
According to a study by the Economic and Social Research Institute (ESRI), the nation’s GDP is set to decline by 12.4 percent this year.
ESRI said that this was the “most likely” scenario under a government plan to lift the lockdown in August.
A more optimistic prediction based on a rapid economic recovery would still see GDP falling to 8.6 percent.
A second infectious wave would have disastrous consequences and would most likely cause output to plummet by 17.1 percent, experts said.
LEO VARADKAR is facing an economic meltdown (Image: GETTY)
An Irish think tank is predicting a particularly severe recession for the Republic of Ireland. (Image: GETTY)
In a statement, they wrote: “Regardless of the scenario, the Irish economy is set to experience the largest annual decline in its history.
“All aspects of the economy will be considerably affected with significant declines in consumption, investment and exports of goods and services.”
The devastating impact of the health crisis on the economy can be seen in Ireland’s new jobless figures for April.
The unemployment rate soared to 28 percent last month, almost double the figure following the financial crisis of 2008, which hit Ireland extremely hard.
The unemployment rate soared to 28 percent last month (Image: GETTY)
In January, just two months prior to the lockdown, Ireland had recorded its lowest jobless levels in 13 years, with unemployment standing at just 4.8 percent.
The adjusted unemployment rate does not include 427,400 more workers on a wage subsidy scheme for impacted companies, where the state agreed in March to pay 70% of wages up to a maximum of €410 a week for an initial 12-week period.
There appears very little chance that the jobs situation will improve any time soon.
ESRI’s experts say the likeliest outcome is for unemployment to remain above 17 percent for the remainder of this year.
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Unemployment looks set to remain above 17 percent for the remainder of this year. (Image: GETTY)
“The financing of such large deficits will come into sharp focus in the months ahead ” (Image: GETTY)
“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.
The Irish Government introduced stay-home measures at the end of March, shutting down all but essential services to slow the spread of the virus.
It now intends to start lifting them gradually from May 18.
Mr Varadkar laid out a roadmap just last week for the gradual re-opening of the economy.
Mr Varadkar and Mr Johnson have clashed often over Brexit (Image: GETTY)
This could see building site and some retailers reopening on May 18, with restaurants following in June, hotels in July and finally pubs in August.
Ireland has suffered 1,615 deaths from the coronavirus, according to official figures.
But on Monday the nation had its first day without a recorded fatality since late March.