Ireland could suffer “multiple economic hits” from Covid-19, the Minister for Enterprise, Trade and Employment Leo Varadkar has warned.
Addressing the annual conference of the Dublin Economic Workshop (DEW), Mr Varadkar said:“A lot people are talking about what type of recovery we might have, whether it is U-shaped or V-shaped or the Nike tick or even K-shaped.”
However, he said these single-hit hypotheses assume the pandemic will only have one economic hit. “It is more likely that there will be multiple waves,” he said.
Mr Varadkar said the current crisis was not like any previous one and that meant there was no guide for what to expect, which made policy decisions extremely difficult.
“We can look back at previous banking crises, there have been many sovereign debt crises, asset bubbles, but it’s very hard to see a comparator for this,” he said.
“I think if there is one, it’s probably more akin to a war or an invasion, a huge demand shock to the economy, and also wars have phases, you have periods where part of your country may be under occupation and parts aren’t, and then you can get reoccupied again,” he said.
The Government has had to slow down its planned reopening of the economy amid a pick-up cases, particularly in Dublin.
The number of cases has risen from three per 100,000 people to 35 now and the average number of cases over the past five days was 175 per day.
Mr Varadkar said the virus was not going away and Europe at the moment was experiencing a second wave.
“I think it’s very possible that we’re going to see multiple waves of the virus, whether they are small waves that lap at our feet or big ones that knock us over again we just don’t know for sure,” he said.
The over-riding imperative in terms of Government policy was to keep the virus suppressed, Mr Varadkar said.
He also said he was confident that there would be a vaccine though the timeline for delivery was difficult to predict.
“The best economic policy was to put public health first. If your staff or your customers are sick or worse still, dead, your business isn’t going to do well,” he said.
The Government’s macroeconomic and fiscal policy was to run large deficits “but we want to be in the middle of the pack when compared to our euro zone peers”.
“We don’t want to be the European country that has the highest deficit as well as pretty big debt because if things do change we’ll be the one picked on first,” he said.
He said he expected the Government’s deficit – the difference between what it spends and what it takes in in taxes – to be close to €30 billion this year.