EU see larger Irish economic hit from Covid-19 than first thought
Ireland's economy will endure a harder downturn this year along with the rest of Europe than thought at the start of the Covid-19 crisis but will stage some sort of rebound in 2021, according to the latest EU forecasts.
Its summer report sees Irish GDP falling by 8.5% this year -- around about the eurozone average and in line with the Central Bank's latest baseline projection -- and will rise by 6.25% in 2021. That means that the size of the economy here will still be smaller at the end of next year amid the economic fallout from the pandemic.
Prices here will fall 0.2% and grow by only 0.8% in 2021.
The EU doesn't make specific forecasts for Irish unemployment but projects prices here will fall 0.2% this year and grow by only 0.8% in 2021.
Significantly, the EU forecasts that the UK, which had one of the largest pandemic case-loads in the world, will suffer one of the largest economic contractions in Europe this year, of 9.7%. The UK economy then grows by 6% in 2021, the EU says, adding that "the risks to the forecast are predominantly to the downside" amid the EU-UK talks over a final Brexit trade deal.
The UK is one of Ireland's most important markets, in particular for many jobs-intensive food firms exporting across the Irish Sea.
The worst-hit economies include other countries that posted high-levels of Covid cases, including Italy and Spain where growth slides by around 11% this year, according to the forecasts.
The two largest eurozone economies, France and Germany, take differing paths. French GDP contracts 10.6% this year and grows 7.6% in 2021, while the German economy contracts by only 6.3% and grows 5.3% next year, according to the projections.
"Ireland’s economic outlook remains affected by specific uncertainty concerning the future relationship between the EU and the UK, potential changes in the international taxation environment and the activities of multinationals registered in Ireland," the EU said.
On the fallout for Europe, EU Commissioner Valdis Dombrovskis said: "The economic impact of the lockdown is more severe than we initially expected. We continue to navigate in stormy waters and face many risks, including another major wave of infections."
He said the forecasts showed that EU governments should support the Commission's "ambitious recovery package".
