The Economic and Social Research Institute (ESRI), an economic research think-tank, has forecast Ireland’s economy is now in recession and will shrink by 7.1% in 2020 due to the coronavirus outbreak.

This forecast assumes the current restrictions stay in place for 12 weeks and the economy enters a recovery phase thereafter.

The ESRI is forecasting consumption, investment and net trade to fall sharply in Ireland over the coming months as households reduce spending, businesses shut down or cut investment, and demand for Irish goods and services from global export markets declines.

Bleak reading

The ESRI’s outlook makes for bleak reading. The research body is forecasting that Ireland’s unemployment rate will soar to 18% by June as over 350,000 people lose their jobs. This would bring the total number on the live register close to 500,000.

The ESRI is also forecasting that the Government will run a 4.3% deficit in terms of spending and tax intake. This is due to the significant fall in revenues for the national exchequer, coupled with the enormous fiscal stimulus package which is needed to support workers who have lost their jobs and assist businesses that have shut down, as well as the additional spending needed to bolster the health service as it combats the coronavirus.

The ESRI did warn that this current scenario forecast could turn out to be too optimistic due to the rapidly escalating impact the coronavirus is having on global economies.