Ireland’s unemployment rate will not get back to pre-pandemic levels until 2023 at the earliest, according to the Economic and Social Research Institute.
The group has lowered its growth forecast for Ireland in its latest Quarterly Economic Commentary.
It still expects the economy to bounce back in the second half of the year, with growth of around 4.4% - but that is dependent on restrictions being lifted in the coming months.
The group is warning that unemployment could remain as high as 16.7% this year, with no return to pre-pandemic levels until 2023.
ESRI Research Professor Kieran McQuinn told Newstalk it will take time for the jobs to return.
“To a certain extent that just reflects the nature of the Irish labour market,” he said.
“So, while we will see a sharp fall in unemployment initially, it will take time, it will take a number of years before we get back to the rate of unemployment we had prior to the pandemic.”
The ESRI is also warning that housing supply could be impacted – leading to further increases in prices around the country.
It is now forecasting that 15,000 new builds will come on stream this year – 25% less than last year and 10,0000 less than promised.
Mr McQuinn said the worsening housing crisis will be one of the long-term economic costs of COVID-19.
“We have downwards our expectation for housing units this year at 15,000,” he said.
“That may be even optimistic at the present time. We will be reviewing it clearly as the year progresses but as I say, it could be one of the big longer-term costs of the pandemic, the impact on the supply-side of the housing market.”
The ESRI is also warning that the Government will run a deficit of €18.5bn in the public finances this year – with a further loss of €8bn expected in 2022.
It notes that Ireland should be better able to sustain its debt burden than it was during the financial crash due to lower global interest rates.
Everything in the forecast in based on the assumption that there will be a gradual easing of lockdown measures form April 5th.
The ESRI is also assuming that the vaccine programme will be successful and there will be no return to lockdown later in the year.
Reporting from Andrew Lowth and Michael Staines