Ireland faces a “highly uncertain” recovery from the Covid-19 crisis and may not actually have seen the worst effects as yet, according to global economic think-tank the Organisation for Economic Co-operation and Development (OECD).
As part of its wider global economic outlook, the OECD said Ireland will see a further level of job losses and business closures if there is a second wave of the pandemic, resulting in another public lockdown towards the end of the year.
If that were to happen, the economy would show no recovery whatsoever during 2021, it said, with long-term unemployment a very real threat.
The returning threat of a no-deal Brexit, high household debt levels, weak profit levels across the country’s main banks, and still high levels of general government debt could all hamper Ireland’s recovery process.
The Government should “stand ready”, the OECD said, to further extend its existing suite of support measures; with loan guarantees and public equity injections for viable businesses able to be delivered as needed. Additional liquidity for viable SMEs may also be needed, it said. Although the Irish economy recovered strongly from the financial and sovereign debt crisis, legacies from that period remain which make it more vulnerable to downside risks. As things stand, the OECD sees the Irish economy – in real GDP terms – shrinking by just under 9% in a worst-case scenario this year; that is to say if there is a s