Ireland sees economy shrinking at least 10% this year

The Irish government expects gross domestic product to fall by 10.5% in 2020 but if coronavirus restrictions last six months longer than expected, it could fall by over 15%, the finance department said on Tuesday. In the base-case scenario, the country would post a deficit of 7.4%, or around 23 billion euros, which would result in an increase of Ireland's debt-to-GDP ratio to 69.1% from 58.8% at the end of 2019.

As a result, the country's debt agency on Tuesday increased its borrowing plans for the year by 10 billion euros to between 20 and 24 billion euros. The government expects the economy to recover swiftly, however, with 6% growth in gross domestic product expected in 2021 in the base scenario, the finance ministry said on Tuesday.

"We are clearly now in the midst of a severe recession, both domestically and globally," Finance Minister Paschal Donohoe told journalists. "The scarring effect and uncertainty mean that recovery in the second half of the year will be gradual." But, he added, the economy and labor market are resilient. "They do have real underlying strengths that were there before the crisis, and this crisis has not altered."

He said the figures, which are to be submitted to the European Union, were more scenarios rather than forecasts in the usual sense due to the unpredictability of the coronavirus pandemic. Ireland, where the economy has been one of the fastest-growing in Europe for the past several years, has ordered its citizens to stay home until at least May 5 to slow the spread of the virus. A gradual relief of the restrictions is planned depending on the growth rate of coronavirus infections.