THE ECONOMIC FALLOUT from the Covid-19 pandemic could see up to 318,000 jobs being lost in Ireland, according to a stark new analysis by financial advisory firm EY.
The analysis lays out two different scenarios for how Ireland’s economy could be impacted, both of which detail signifcicant job cuts and an unprecedented contraction of the economy.
Under the ‘prolonged disruption’ scenario, which assumes a high-level of economic disruption until August, EY predicts that Ireland’s GDP could contract this year by as much as 13.1%, qualifying as a depression.
Under this scenario, 675,000 jobs could either be lost or effectively put on hold during the period of disruption, with job losses coming in at 318,000 when the disruption ends.
By contrast over the last five years, Ireland has created some 330,000 jobs.
The less severe prediction, described as ‘the base scenario’, assumes a high level of disruption up until May and predicts a GDP contraction of 7.3%.
Under this prediction, 450,000 jobs could be affected during the period with 177,000 lost once the disruption ends.
Yesterday, the Department of Social protection said there were 323,000 requests for supports from people who have lost their jobs in just 14 days.
Professor Neil Gibson, chief economist for EY Ireland said that while the human cost of the conravirus is “sadly rising every day”, the economic cost is rising too.
“The effect of this pandemic will be felt for years, if not decades due to the scale of borrowing required to see economies through the most virulent phase of the outbreak,” Gibson said.
“Early estimates from the EY Economic Eye model suggest a recession is certain, and a depression is possible if the economic restrictions need to be in force for a protracted time.”
Similar dire predictions for the economy were made by the Economic and Social Research Institute last week, which said that the pandemic was “the greatest threat that the Irish economy has faced since the financial crisis”.
Yesterday, the OECD released a report that evaluated the the initial impact of Covid-19 on the economies of some 47 developed nations.
The report predicted that Ireland’s GDP would be least affected of all of the countries analysed, although still shrinking by over 15%.
Analysts at Davy also noted yesterday that the hit Irish GDP may be relatively small compared with other EU countries because hospitality and retail only accounts for 11% of GDP.
Despite this, Davy also points out that the hit to global GDP growth and the Irish economy will be larger than expected just one week ago.
In speaking about the potential long-term effects of the widespread economic shutdown and the work-from-home procials being introduced by many companies, Gibson adds that the Irish workforce could be different when all restrictions are lifted.
“The embedding of technology to allow remote working has been rapidly accelerated, as has the adoption of online ordering,” he said.
“Many workers have seen meetings dropped from the diary or condensed into a shorter online format and there are stories of a resulting boost to efficiency and productivity. The need to socialise and the importance of face to face contact will remain but undoubtedly our ways of working will look different when the pandemic eases.”
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