Lockdown in Ireland tells a tale of two economies

Despite large falls in spending, Ireland's GDP has not declined to the extent expected

Household spending plummeted during lockdown but GDP has declined only slightly. Picture Dan Linehan

Household spending crashed during the Covid lockdown months but the hit to the economy as measured by GDP was mild compared with elsewhere in Europe, which "tells a tale of two economies", according to the Economic and Social Research Institute. 

Despite having one of the largest falls in household spending in Europe during the "lockdown’’, robust export growth in a small number of important sectors (computer services and pharmaceuticals) meant GDP did not decline in the first half of 2020 to the extent expected.

"The Irish economic experience in lockdown is a tale of two economies: the domestic economy has been severely hit with sectors such as construction, arts and recreation, and hospitality experiencing some of the largest declines across Europe," said senior research officer Conor O’Toole. 

"However, exports from multinationals in computer services and pharmaceuticals increased relative to 2019 leading to a much more benign impact on overall GDP.” 

While industrial value added grew by over 10 per cent in the first half of 2020, value-added in construction fell by over 40 per cent, value-added in arts, entertainment and recreation fell by nearly 75 per cent - both of these represent the largest declines of any EU country or the UK.