There may be some signs the economy is creeping back into life after it experienced severe Covid-related shocks in March and April that pushed it into the deepest recession on record.
The Central Bank of Ireland’s monthly Business Cycle Indicator (BCI) for April showed that the fall in economic activity in April was about twice as deep as the financial crisis.
“The latest preliminary estimate of the BCI for May 2020 points to some stabilisation in economic conditions, but the overall level of activity remains substantially below that observed prior to the Covid-19 outbreak,” economists Thomas Conefrey and Graeme Walsh wrote in a report issued today.
Lockdowns implemented to contain the spreads of the coronavirus saw swathes of the economy closed – with the food and accommodation sectors especially badly hit – and resulted in more than million Irish workers becoming dependent, at least in part, on the Government for their income.
In April, consumer sentiment fell by 45pc reaching a near all-time low during the period in which mandatory “stay at home” restrictions were in place.
There was a gradual easing of restrictions in May with construction sites among those who staged a partial return to work and on Monday, sections of the retail reopened, albeit at lower capacity than usual due to social distancing measures.
In May, the number of persons out of work fell by approximately 50,000 bringing the Covid-adjusted unemployment rate down to 26.1pc as the restrictions were eased.
“The latest data show that consumer sentiment bounced back by 22pc in May, however, the level of the index remains extremely low by historic standards,” the Central Bank economists wrote.
It is too early however to predict whether the economy will bounce back sharply from the recession.
Ireland had one of the toughest lockdowns in Europe and has been slower to emerge from it.
There are encouraging initial signs elsewhere, with rapid rebounds in German and Australian restaurant sectors which are seen as a good omen for sectors that are likely to be hit hard by voluntary social distancing once lockdown measures are reversed.