The Economic and Social Research Institute has described the Covid-19 virus outbreak as a major shock to economic life which is unprecedented in modern times.
In its latest Quarterly Economic Commentary, the think tank urges the Government to invest in social housing and retrofitting homes to stimulate the economy.
The ESRI has added its voice to calls for the government to stimulate activity in the economy, which it expects to be ‘very fragile’ in the short to medium term.
It expects unemployment this year to average 17%.
It believes the downturn prompted by Covid-19 is a good time to catch up with the underlying demand for housing. It also recommends projects like retrofitting homes to help Ireland reach its climate goals.
But it warns this necessary investment will increase the deficit, which it expects to be around €27 billion this year. So too will any extension to the Pandemic Unemployment Payments.
It finds that household savings may double during the pandemic which could deliver a boost to the economy, once a recovery begins.
It warns that supports for business will be difficult for government to get right. Difficult choices will have to be made and not all firms will survive.
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