The business lobbying group forecasts Irish unemployment to level off at 16% and GDP to contract by 11% for the year.
IBEC IS EXPECTING Irish unemployment rates to hit 16% by the end of the year and consumer spending to fall by 14% in a best-case scenario.
The business lobby group has also forecast Irish Gross Domestic Product (GDP) to fall by 11% in 2020 as a result of the pandemic-related economic crisis.
In its quarterly economic outlook, published this morning, Ibec highlights the “stark picture” painted by current unemployment numbers, which stand at around 28% of the workforce.
“Combined numbers on the Live Register and Pandemic Unemployment Payment are now over 800,000, the highest number of people out of work in the history of the state,” the report stated.
However, the lobbying group says that despite the sudden increase in jobless figures in March and April, we are reaching a point “where the dramatic rise in unemployment is levelling off”.
The report estimates that in a best-case scenario, unemployment will fall from over 28% in the second quarter to 16% by the end of the year and to around 7% by the end of 2021.
The group’s forecast is broadly in line with that of the Economic and Social Research Insititute’s (ESRI), which published its own quarterly outlook last week.
In its best-case scenario — in which there is some recovery towards the end of the year as lockdown measures are gradually eased but public health restrictions, such as social distancing, remain in place — the think-tank said that unemployment rates will level off at 17% by the end of the year.
Echoing the ESRI’s report, Ibec has also highlighted the burden of job losses on young workers.
“Those unemployed in the wake of COVID-19 are disproportionately younger workers, who represent a high proportion of employees in retail, hospitality and tourism, the sectors worst affected by lockdown measures,” the Ibec report says.
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“Experience from the 2008 financial crisis indicates that youth unemployment is particularly intractable and there are likely to be longer-term implications for this cohort as these sectors are also those which face the greatest difficulties in reopening and a return to normal staffing levels in the medium-term.”
Ibec chief economist, Gerard Brady, commenting on the report said, “We are currently living through the sharpest compression of economic activity in living memory. Whilst many of the collapsing economic figures presented in this report are the result of necessary public health decisions, their impacts on incomes and balance sheets are no less real.
“The recent roadmap published by Government gives welcome clarity on when sectors may expect to be allowed re-open again, but it is also clear that normal conditions will not return for some time.”
Separate figures, published by the Department of Finance yesterday, revealed that total government expenditure at the end of May was 19% greater than expected – up by €4.175 billion.
According to the figures, the state’s budget deficit hit €6.1 billion by the end of last month, compared to €63 million recorded in the same period last year, due to high levels of spending on pandemic-related income supports and subsidies.