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It could take up to three years for Ireland\u2019s economy to return to pre-crisis levels of activity, the D\u00e1il has heard.<\/p>\nIt could take up to three years for Ireland\u2019s economy to return to pre-crisis levels of activity, the D\u00e1il has heard.<\/p>\n
Sebastian Barnes, acting chairman of the Irish Fiscal Advisory Council, said the health crisis will have a lasting effect on the economy.<\/p>\n
He told the Oireachtas special committee on Covid-19 that there are \u201chuge uncertainties\u201d for the economy in Ireland.<\/p>\n
Mr Barnes presented three different economic scenarios because of the \u201cexceptional uncertainty\u201d surrounding Covid-19 and the possible health and economic outcomes.<\/p>\n
He added: \u201cActivity falls sharply in all scenarios before recovering.<\/p>\n
\u201cThe scenarios imply it would take two to three-and-a-half years to return to pre-crisis levels of activity.<\/p>\n
\u201cBy contrast, the Irish economy took 11 years to recover after the financial crisis.\u201d<\/p>\n
Presenting evidence on behalf of the council, which is an independent body, Mr Barnes said that broad phases of the crisis and recovery are relatively clear.<\/p>\n
\u201cAs the economy exits lockdown, a sizable stimulus would help the recovery,\u201d he said.<\/p>\n
\u201cHowever, some adjustments are likely to be needed down the line to get the debt ratio on a safe downward path again.<\/p>\n
\u201cTo safeguard the funding of public services and supports in future, while addressing future challenges, the incoming government should set a credible path for a prudent fiscal policy and take steps to reinforce its budgetary framework, including meaningful debt ratio targets and more effective medium-term budgeting.\u201d<\/p>\n
Fine Gael\u2019s Jennifer Carroll MacNeill pressed the council on its estimated economic recovery time frame.<\/p>\n
Michael McMahon, a member of the council, said: \u201cThe key thing to think about when trying to assess what type of economic slowdown or recession we are experiencing now is to recognize the recession is itself a public health measure.<\/p>\n
\u201cLockdown has been done with the objective of protecting public health. As a result, it is a different form of recession to ones we have seen in the past.<\/p>\n
\u201cThe points we would stress about why this would be a recovery that is faster than the financial crisis is that Ireland went into this crisis, both in terms of household and corporate balance sheet, but also in terms of the fiscal position, in a much healthier place.<\/p>\n
\u201cHow we recover this depends on things that are very hard to ascertain.<\/p>\n
\u201cAt what rate do people decide they will be confident to go back to shopping in non-essential shops and at what rate will people engage with the entertainment industry, like pubs or restaurants.<\/p>\n
\u201cThese behavioral responses will depend on lots of different things that are difficult to ascertain.<\/p>\n
\u201cWith some fiscal stimulus in the recovery phase after the initial health impact has been mitigated, Ireland could be back in some two-and-a-half years to three years.\u201d<\/p>\n
Mr Barnes also said that its estimated \u20ac10bn stimulus package may need to increase to meet the changing economic landscape.<\/p>\n
Sinn F\u00e9in\u2019s Pearse Doherty said that it is believed the figure should be \u20ac30bn.<\/p>\n
Mr Doherty also said the council\u2019s projections do not take into account the issue of Brexit at the end of the year.<\/p>\n