Among OECD countries, Ireland’s economy is predicted to be the least damaged by coronavirus containment measures – but it is still set for a major blow.
The OECD has published a report evaluating the initial impact of coronavirus containment measures on its members’ economies, with Ireland expected to be the least scathed.
The report said that while it is “extremely difficult to quantify the exact magnitude of the impact” of the coronavirus pandemic – and the resulting Covid-19 disease – many countries have introduced unprecedented measures to contain its spread.
These containment measures – such as forcing many businesses to close their doors – could lead to a decline in the level of output of between one-fifth to one-quarter in many economies.
“Changes of this magnitude would far outweigh anything experienced during the global financial crisis in 2008-09,” the report said.
The scale of estimated output decline is equivalent to a fall in annual GDP growth of up to 2pc for each month that strict containment measures continue. If a shutdown continued for three months with no offsetting factors, the OECD said, annual GDP growth could be between 4pc to 6pc lower.
While the majority of the economic downturn will be felt by retailers, wholesalers and real estate, the report said that countries in which tourism is crucial to their economies could be affected more severely by travel restrictions and the closure of shops and tourism sites.
“At the other extreme, countries with relatively sizeable agricultural and mining sectors, including oil production, may experience smaller initial effects from containment measures, although output will be subsequently hit by reduced global commodity demand,” it said.
This has led Ireland to be classed as being potentially the least affected by restrictions, with a predicted 15pc dip in GDP versus 35pc in Greece.
“The high costs that public health measures are imposing today are necessary to avoid much more tragic consequences and even worse impact on our economies tomorrow,” said OECD secretary-general Angel Gurría.
“Millions of deaths and collapsed healthcare systems will decimate us financially and as a society, so slowing this epidemic and saving human lives must be governments’ first priority.
“Our analysis further underpins the need for sharper action to absorb the shock, and a more coordinated response by governments to maintain a lifeline to people and a private sector that will emerge in a very fragile state when the health crisis is past.”