The resilience of the Irish economy will mean it will grow by 0.8% this year, the country’s largest business group has forecast in its latest Quarterly Economic Outlook.
2021 will still bring challenges, Ibec states, but nonetheless it expects Gross Domestic Product to power back and grow by 5.3%.
Much of the recovery will be driven by continued export growth of 2.1% next year following a 5.3% increase in 2020, the organisation claims, as the sector continues to hold up well despite the Covid-19 pandemic.
“We look to be on course to be the only country in Europe with growing exports and potentially a growing economy in 2020,” said Ibec chief economist Gerard Brady.
The employers’ group also thinks that the substantial and record level of savings accumulated by households will provide an additional boost to growth in 2021.
More than €11 billion in savings have been built up by Irish adult and child savers this year, bringing it close to the levels of savings that were unleashed from SSIA accounts in the mid-2000s.
This resource, coupled with pent up demand, could propel a 15.1% increase in consumer spending and a recovery in employment, Ibec forecasts.
However, it says correct incentives will be needed to make this happen.
The organisation is forecasting that employment will grow by 7.7% in 2021, compared to a fall of -10.8% this year, although there will be significant regional variations.
“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 12 months,” Mr Brady said.
However, despite the expectation of a bounce back, Ibec is warning that next year will be difficult and challenging.
“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,” Mr Brady cautioned.
“This will bring significant additional costs and unavoidable disruption to both the UK and the EU.”
He added that while supply chains are resilient, if there is severe disruption arising from Brexit, the parts of the economy that are worst hit, such as the food and drink sector, will require ongoing assistance.