ESRI revises downwards economic growth forecast
The Economic and Social Research Institute has revised downwards its forecast for growth in the economy this year.
In an opening statement to the Oireachtas Committee on Budgetary Oversight, Karina Doorley and Kieran McQuinn say their assumptions about restrictions this year made in their last published Commentary in December, had not factored in a level 5 lockdown.
As a result, growth this year will be reduced to 4% from December’s forecast of 4.9%.
In addition, the Institute expects unemployment to average 27% across the first three months of this year.
It expects unemployment to fall throughout the rest of this year and believes unemployment will still be just above 10% at the end of 2021.
It expects unemployment to average around 8% in 2022.
The ESRI cautions that its forecasts assume that vaccines will be rolled out successfully to most of the general population in the second half of this year.
It expects the deficit in the public finances to be slightly bigger than forecast at €18.9 billion.
It says that if the average rates on Irish government debt remain constant over the next ten years, then higher debt levels will be ‘sustainable’.
However, it cautions that were interest rates to increase, “…then the debt dynamics would not be as reassuring.”
It believes the Irish economy is ‘better placed than most’ to recover from the pandemic.