Growth forecasts unchanged by latest reopening delays, economists say 

ESRI research professor Kieran McQuinn said a relatively small number of weeks' delay to remaining reopening moves would not be sufficient to derail any positive economic growth forecasts.

The further delay in reopening indoor hospitality and rising concerns over the Delta variant of Covid-19 shouldn’t alter the Irish economy’s ability to grow strongly this year and start its recovery from the Covid crisis, according to economists.

One said it would take another long-running blanket lockdown of commerce and society to derail economic growth.

While the Central Bank is due to issue its latest economic growth forecast this week, both employers’ group Ibec and economic think-tank the Economic and Social Research Institute (ESRI) have both issued strong outlooks in the past week.

Earlier this week, Ibec said it sees GDP growing 6.5% this year, mainly on the back of continued strong export momentum.

Economy to surge by 11%

The ESRI, meanwhile, said it expects the economy to surge by a whopping 11% this year and about 7% next year.

The institute made those predictions last week and stands by them in the aftermath of the Government’s latest delay to full reopening.

ESRI research professor Kieran McQuinn said a relatively small number of weeks' delay to remaining reopening moves would not be sufficient to derail any positive economic growth forecasts.

Mr McQuinn said the continued positive vaccine rollout rate remains key to growth hopes. He said it would take another complete lockdown – of the type last seen after Christmas – spanning one or two months for recovery forecasts to be dented.

Earlier this month, Mr McQuinn told the Irish Examiner that new Covid variants would likely only cause “a bump in the road” to a very strong rebound in the Irish economy this year, through a slowing – opposed to an ending – of the reopening of the economy.

In its economic forecast last week, the ESRI said the Irish economy should, next year, be fully back to where it would have been if Covid had never occurred.

Even in GNP terms, which excludes the huge contributions made by export-orientated multinational companies, the economy should grow by about 8.5% this year and close to 6% next, the Institute said.

Similarly, Ibec doesn’t see macro forecasts changing on the Government’s latest announcement. But, it warned the economy won’t benefit from the return of about 25,000 workers now that indoor hospitality’s reopening has been shelved. It said the reopening of indoor pubs and restaurants last year resulted in a 44% fall in PUP recipients.

Eurozone economic sentiment surged

Meanwhile, eurozone economic sentiment surged in June to a 21-year-high as an accelerated pace of Covid vaccinations led to further reopening and an improved mood across all sectors of the bloc’s economy, notably in retail and services.

Sentiment became much more upbeat in services, the eurozone's biggest sector that is responsible for more than two-thirds of GDP. Optimism in industry, construction and among consumers also ticked up, although more modestly. Sentiment in Germany hit an all-time high and improved in the six largest EU countries, except Spain, where it slightly declined.

• additional reporting Reuters