The latest OECD Economic Outlook has warned that if the Irish economy is to have any chance of rebound in 2021, avoiding a second wave of COVID-19 infections is vital.
If a second wave were to occur, the OECD forecasts a GDP decline of 8.75% in 2020 with virtually no recovery in 2021. Meanwhile, if a second wave were to be avoided, GDP would fall by 6.75% in 2020 before recovering somewhat by 4.75% in 2021.
Elsewhere, the unemployment rate is set to increase to at least 10.8% in 2020 before falling to 8.5%. With a second outbreak, the unemployment rate would rise above 12% and stay above that level in 2021. The report highlights the cushioning that the government’s public support has provided, particularly in direct wage subsidy and unemployment benefits.
According to Goodbody Stockbrokers, "Being a small open economy, the trajectory of Ireland’s recovery is also highly dependent on other countries’ handling of the virus. With this in mind, Ireland’s recovery path is highly uncertain. The latest OECD Outlook reminds us that the possibility of a second wave must be taken into consideration as lockdown measures are lifted."