Earlier this year, the ESRI warned that the Irish economy was facing into the largest recession in history.
Figures released by the Central Statistics Office (CSO) on Monday (7 September) have revealed that Ireland is now officially in recession.
The CSO figures revealed Gross Domestic Product (GDP) contracted by 6.1% in the second quarter of 2020. An initial estimate that GDP had increased by 1.2% in the first quarter of the year was subsequently revised downwards.
A recession is identified by a fall in GDP in two successive quarters.
The 6.1% drop in the second quarter of 2020 is the largest ever recorded and has been attributed to the “severe and acute impacts of the Covid-19 restrictions”. While those restrictions took effect from March, the CSO said the first quarter was not impacted by the full severity of the pandemic.
Breaking down the figures, while spending by government on goods and services increased by 7.5% in the second quarter of the year, personal consumption of goods and services – a key measure of domestic economic activity – decreased by 19.6%.
Economic activity in the construction sector alone contracted by 38.3% and in the Distribution, Transport, Hotels and Restaurants sector by 30.3%.
Activity in the multinational-dominated Industry sector actually grew by 1.5% in the second quarter of 2020, but Gross National Product (GNP) - a measure of economic activity that excludes the profits of multinationals - contracted by 7.4%.
In May of this year, the Economic and Social Research Institute (ESRI) warned that Ireland was facing into the “largest recession in history”, anticipating that consumer spending would fall by 13% and that unemployment in Ireland would average out at 17%.