Resilient performance of Irish economy provides outlook of hope and change

Ibec, the group that represents Irish business, today published its new Quarterly Economic Outlook Q4 2020 (see attached below), which forecasts an increase in GDP of 0.8% in 2020. The group says that the Irish exporting business model is proving resilient in the face of COVID and this strong export performance will be the central pillar of the economic recovery over the coming years. The other pillar will be delivering record household savings into the domestic economy. If the right incentives and channels are found, 2021 could be an extraordinarily strong year for consumer spending which would in turn, drive a recovery in employment. 
 
Commenting on the report, Ibec Chief Economist, Gerard Brady, said: “Despite the ongoing challenge of COVID and the inevitable impact of Brexit next year, there is cause for optimism in the economic outlook. Recent months have again shown the continuing resilience of Ireland’s export-driven growth model during a difficult period. We look to be on course to be the only country in Europe with growing exports and potentially a growing economy in 2020. The recent progress toward an effective COVID vaccine rollout, although not a panacea, also provides some hope of a return to normality for consumer facing sectors over the next twelve months. 
 
“While the ‘experience economy’ and large parts of the retail sector have been disrupted by public health restrictions, most of our economic sectors have shown strong and growing resilience. Significant ongoing government supports for those households and sectors worst hit has also helped to mitigate the impact of COVID. Together this has meant that over €11 billion of savings have accrued in the bank accounts of Irish households this year – close to the levels of SSIA savings released in the mid-2000s. If we find the right incentives and channels to deliver those savings into local economies, then 2021 could be an extraordinarily strong year for consumer spending. 
 
“While there is hope for the Irish economy to turn a corner next year, the New Year will also bring change and challenges. No matter what happens when it comes to the trade negotiations, in the coming weeks, the UK’s transition out of the EU will end and a new relationship will begin both on this island and with Britain. This will bring significant additional costs and unavoidable disruption to both in the UK and the EU.  
 
“This disruption means that the prospect of an ongoing ‘no-deal’ outcome is not one either party can afford to countenance. If a trade deal is not agreed before January, that will not be the end of the process. The clock will begin again on negotiations to agree a deal in 2021 which limits this significant damage tariffs and quotas will bring. Recent months have shown how our resilient supply chains can continue to function in delivering goods on and off the island, during a severe disruption, but the sectors and communities worst impacted will need ongoing support to adapt.”