EY Ireland predicts 6.7% to 10% drop in NI GDP due to coronavirus, with a recession likely

  • Projections from professional consulting firm EY Ireland suggest up to 132,000 jobs in Northern Ireland could be at risk due to the coronavirus outbreak.

    EY Ireland has released its analysis of the economic impact of the ongoing coronavirus outbreak in Ireland and Northern Ireland, and the figures don't look good. The firm estimates that Ireland's GDP could shrink by between 7.3% and 13.1%, while Northern Ireland's could shrink by 6.7% to 10.0%, with significant numbers of job losses across both regions.

    The company modelled two different economic scenarios: A best-case scenario in which the disruption ends at the end of May 2020 and businesses begin to return to normal; And a "Prolonged Disruption" scenario in which lockdowns and restrictions continue until the end of August. Though nobody knows how long the disruption will really last, these scenarios are considered the most likely extremes right now.

    The "Best Case" Scenario would see an estimated 78,000 permanent job losses across Northern Ireland, with GDP shrinking by 6.7%. If the "Prolonged Disruption" scenario were to hit, EY estimates that it could lead to up to 132,000 permanent job losses in Northern ireland as GDP shrinks by up to 10%. These figures don't include those who are temporarily furloughed and are expected to rejoin the workforce after the pandemic.

    EY Ireland's Chief Economist Professor Neil Gibson commented on the projections: "The effect of this pandemic will be felt for years, if not decades due to the scale of borrowing required to see economies through the most virulent phase of the outbreak. Early estimates from the EY Economic Eye model suggest a recession is certain, and a depression is possible if the economic restrictions need to be in force for a protracted time."

    Speaking about how businesses have adapted to the crisis, Neil noted: "After the crisis, the economy is likely to be forever altered. The embedding of technology to allow remote working has been rapidly accelerated, as has the adoption of online ordering. This will create opportunities for businesses in the future, although increased homeworking would clearly be challenging for the high street and transport companies."

    Source: Written based on press release

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    Brendan is a Sync NI writer with a special interest in the gaming sector, programming, emerging technology, and physics. To connect with Brendan, feel free to send him an email or follow him on Twitter.

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