The economy is set for a deep and harsh recession this year as a result of the impact of the coronavirus pandemic, the Economic and Social Research Institute warned today.
“Under this scenario, the Irish economy would shrink by 7.1pc in 2020,” ESRI said of a situation in which the current lockdown continues for 12 weeks.
“Consumption, investment and net trade would all fall sharply; households would cut spending, firms would cancel or postpone investment and external demand for Irish goods and services will fall,” the institute said in a report.
It said that 350,000 would lose their jobs under this scenario and the unemployment rate would rise to 18pc from 4.8pc.
Ireland's GDP has outperformed everywhere in the EU each year since 2014, and before the onset of the virus the ESRI expected the economy to grow by up to 4pc this year. It now expects a recession with output contracting by 7.1%.
The resulting pressure on the public finances results would mean a deficit of nearly 4.5pc of GDP, after two years of small surpluses.
In addition, the think tank warned that unemployment is set to increase from 4.8pc in February to around 18pc by summer, falling back to just under 11pc by the end of the year.
The research assumes that current restrictions on economic activity remain in place for a period of 12 weeks, and the return of domestic and international economic activity in the second part of the year.
"If this does not occur, then the results will be even more adverse for the domestic economy," the researchers behind the assessment said.
A significant package of measures to support those already left unemployed and workers at risk of joining them was announced by the Government earlier this week.
The additional financial measures will cost an initial estimated €3.7 billion over a 12 week period.
With additional reporting from Reuters