EY: Economic commentary on the Plan for Living with COVID-19

Responding to the Government’s ‘Plan for Living with COVID-19’ announcement today, Annette Hughes, Director EY-DKM Economic Advisory says:

“Today’s announcement by the Government is focused on getting all sectors of the economy up and running safely. This is a challenging ‘balancing act’ as it is the development of the virus that will determine the level of restrictions which are to apply across the country and thus how quickly the economy recovers.

“Some sectors, notably tourism and hospitality, travel and non-food retail are suffering more than others but it is encouraging to see the pandemic unemployment payment staying open, although more clarity is required on how else the Government ‘will continue to back enterprise and protect workers as best they can’.

“The plan places the onus on each of us to ensure that we don’t return to the most severe level 5 restrictions.  The more serious situation in Dublin, the engine of the economy, which represents 43% of total economic activity, will mean that the total economic activity  in 2020 will be less than it would otherwise be.  We have seen an unprecedented quarterly contraction of 6.1% in GDP in the second quarter of 2020 due to the restrictions and our current forecasts are for a 10.8% contraction in GDP in 2020.

“For an open economy like Ireland, recent OECD pronouncements that the global economy will fare worse should a second wave of infections materialise, are a concern. Thus our economic prospects are very uncertain with the path of the pandemic more likely to determine our economic future over the next 18 months.”