Government plans to reopen the economy are more cautious in Ireland than time-tables that have been announced internationally which will slow economic recovery, Goodbody Stockbroker has warned.
An analysis by the firm says while Government here was quick to introduce large-scale welfare and health supports, support for businesses is lower than elsewhere. This needs to be lifted quickly, it said, including with a large government-guaranteed loan scheme for firms.
Goodbody's Activity in Ireland Dashboard (AID) is tracking data on traffic, financial payments, energy use, jobs and restaurant bookings to monitor the pace of exit from lockdown - and said there's little sign of activity levels returning to normal.
Meanwhile, Finance Minister Paschal Donohoe told Reuters yesterday that the deficit this year - the gap between the State's spending and its income mostly from tax -could balloon to more than €30bn.
The deficit that has already opened up is a result of Government having already committed to spend more than €13bn to cope with the health, social and economic costs of Covid-19 at the same time as tax income is falling dramatically.
Goodbody is forecasting a budget deficit of 16pc of adjusted gross national income (GNI) and for the national debt to rise to 120pc of GNI, but warns that any predictions are highly uncertain in the current environment.
Analysts thinks more assistance from Government for business sector will be necessary to avoid large-scale business failures, but at the same time, believe the reopening of the economy may be speeded up, which would lessen the economic hit.
"The success here to date in containing the spread of Covid-19 and Ireland's success in controlling the virus suggests that the reopening plan could be accelerated, thus limiting the longer-term economic damage to jobs and the public finances," it said.
Goodbody expects the incoming government to implement a recovery plan focused on job-intense sectors, including construction.
However, with around half of jobs here sustained by international demand, the pace of recovery will ultimately come down to economic recovery in the global market, the report said.
At the same time, the detail of how the economy reopens will also dictate the pace of growth.
"Ireland's attractiveness as a destination for large ICT and healthcare firms puts it in a good position to gain from recovery," Goodbody's chief economist Dermot O'Leary said.
"However, while a simple narrative about the potential recovery is appealing, it ignores that different sectors of the economy will reopen at different speeds, and many businesses will not reopen at all."
In a potential repeat of the fallout from the last crisis, Goodbody expects housing supply to fall from current levels which are already well below what experts believe is required to accommodate the growing population.
It is feared that builders may opt to sit on sites rather than push ahead with schemes in a market where house prices are expected to fall by up to 15pc.