Irish gross domestic product could fall by as little as 0.4% this year if a return to lockdown can be avoided, the country's central bank said on Tuesday, sharply revising up its forecasts due to a "partial and uneven" recovery.
Ireland's government rejected a surprise recommendation by the country's health chiefs to enter Europe's first major second-wave national lockdown on Monday, instead tightening COVID-19 restrictions across the country for three weeks.
The nationwide banning of all indoor restaurant dining and trips outside each county is consistent with the central bank's baseline scenario for a targeted stepping-up of containment measures from time to time.
The projected GDP fall of 0.4% in such a scenario compared with a forecast 9.0% drop three months ago before a strong export performance, particularly among Ireland's large multinational sector, led to one of Europe's shallowest recessions.
Underlying domestic demand is nevertheless projected to fall by 7.1% this year and the GDP growth of 3.4% projected for 2021 is not as fast a recovery as previously anticipated, mainly due to the central bank's assumption of a no-trade-deal Brexit.
Under the central bank's more severe scenario, GDP would fall by 1.1% this year and 0.3% in 2021, although the highest level of COVID-19 restrictions that the government rejected on Monday would fall somewhere between the two scenarios, Director of Economics Mark Cassidy said.
"It is clear there has been a degree of adaptation following the initial (lockdown) experience. For example, we know firms increased their online offerings and take away options in the case of restaurants where possible," Cassidy told reporters.
"Spending began to increase significantly halfway through the previous lockdown and that reflects well at this point. Also households have now accumulated significant savings so precautionary behaviors this time may not be significant." (Reuters)
Source: www.businessworld.ie
