Economic Life and COVID-19 in Ireland, 2020-2021

This new CSO report, ‘Economic Life and COVID-19 in Ireland, 2020-2021’ provides an economic overview of the impacts of the pandemic on citizens and enterprises up to the first half of 2021, compared with the time period immediately before the pandemic. During a time when many people faced numerous challenges in their daily lives, this report ties together the immediate economic changes brought about by the pandemic by examining a range of indicators.

The data in this release is compiled from a range of CSO outputs and will become out of date over time as sources are revised. Readers are encouraged to consult the most up-to-date release for each source when interpreting these findings. The Background Notes has a full list of the data sources used, along with links to the most recent releases.

When the pandemic started, many public health restrictions and guidelines were introduced to curb the spread of the virus. These ranged from the closure of non-essential businesses to limits on travel. Throughout 2020 and continuing into 2021, public health restrictions and guidelines were removed and introduced when necessary. As many of these measures to curb the spread of the virus were not in place uniformly at various points, i.e. regional measures were introduced, it is useful to generalize that in times of high case numbers, more restrictions were in place, and during periods of lower case numbers, less restrictions were adopted.

There were three waves of COVID-19 infection in Ireland between the beginning of Q1 2020 and the end of Q2 2021[1],[2]:

• Wave 1: 01 March 2020 to 01 August 2020
• Wave 2: 02 August 2020 to 21 November 2020
• Wave 3: 22 November 2020 to 25 June 2021

The weekly infection numbers are displayed in Figure 1.1.

This report analyses the economic impact under four main headings:

• ‘How we Worked’ looks at changes in earnings, hours worked and the labour market. It also looks at the income supports introduced by the Government and their effect on employee income.
• ‘What we Consumed’ examines shifts in consumer spending, consumption patterns and prices.
• ‘What we Produced’ reviews changes in international trade and the prices received for goods and services, alongside the costs encountered of necessary inputs.
• ‘Impact on Macro-Economics’ ties all these changes together and looks at their effects on Government finances.

Key Points

About one in five people who received the Pandemic Unemployment Payment (PUP) were employed in Accommodation and food service activities. However, those who remained in employment in this sector received higher hourly earnings during 2020 and 2021 compared with 2019, with average hourly earnings of €15.63 in Q2 2021, compared with €13.29 two years previous.

There were 7.6 million less hours worked per week in Q1 2021 than in Q1 2020 and 9.1 million fewer than the same period of 2019. While the number of hours worked per week remained below the same period pre-pandemic, 14.9 million additional hours were worked per week in Q2 2021 in comparison with Q2 2020. Although less hours were worked per week in Q1 and Q2 2021 than the same quarters two years previous, Gross Value Added (GVA) was higher by 19.5% in Q1 2021 and by 19.3% in Q2 compared with Q1 and Q2 2019.

Household expenditure on goods and services in Ireland fell by €10bn in 2020. The biggest impact was on household spending on Restaurants and hotels, which fell by €6.5bn. However, spending on Alcoholic beverages (purchased for home consumption) rose by €488m (up 22.0%) to reach €2.7bn. 

Average consumer prices, as measured by the Consumer Price Index (CPI), were lower by 0.3% in 2020 compared with 2019. However, average consumer prices were 1.1% greater in Q2 2021 than the same quarter pre-pandemic (2019).

The value of goods exported rose by €9.5bn in 2020 to €162.1bn, while the value of goods imported fell by €4.0bn to €87.1bn, resulting in a trade surplus of €75.0bn. The increase in the value of goods exported can almost entirely be attributed to Chemicals and related products, n.e.s., which rose by €12.8bn in 2020 and accounted for €2 in every €3 of exports. On the other hand, the value of Miscellaneous manufactured articles and Machinery and transport equipment exports fell by €1.4bn and €1.0bn respectively in 2020, and had a dampening effect on the trade surplus.

New dwelling completions fell by 536 units in 2020 to 20,532, compared with 21,068 in 2019. There were 8,918 new dwellings completed in the first half of 2021, compared with 8,158 in the same period of 2020, and 9,047 in the first half of 2019. In addition, wholesale prices of building materials (excluding VAT) were 5.5% higher in Q2 2021 than Q2 2020, and 5.7% greater than Q2 2019.

Property prices generally increased throughout 2020 compared with 2019. This trend continued into 2021 and by Q2 property prices were 5.9% more expensive than two years previous. Growth in property prices was not uniform over this period. While prices in Dublin largely fell in 2020 compared with one year previous, outside of Dublin prices rose or remained the same. By Q2 2021, property prices in Dublin were 4.8% more expensive than two years previous, while prices outside of Dublin had risen by 7.2%.

GDP at constant market prices increased from €356.5bn in 2019 to €377.4bn in 2020, a rise of 5.9%. GDP was €207.2bn in the first half of 2021, 16.3% higher than the same period of 2020 and 20.8% higher than the same period of 2019.

Modified Total Domestic Demand (MTDD) decreased from €189.8bn in 2019 to €181.8bn in 2020, a fall of 4.2%. MTDD is an indicator that is designed to exclude globalisation effects that have a disproportionate impact on the measurement of the size of the Irish economy. Over the same period, Gross Value Added (GVA) by foreign owned Multinational Enterprise (MNE) dominated sectors increased by 23.1% (from €151.1bn to €186.1bn), while GVA by sectors not dominated by foreign owned MNEs fell by 8.7% (from €184.2bn to €168.1bn).

There was a Government deficit of €18.4bn in 2020 compared with a surplus of €1.8bn in 2019. This deficit was contributed to by an increase in Government expenditure of €15.7bn, and a fall in revenues of €4.5bn. In contrast, households saved more during the year, with gross saving of households increasing by 166.0% to 31.5bn in 2020, compared with €11.9bn in 2019. In comparison, gross saving of households only rose by 1.2% (or €0.1bn) between 2018 and 2019.

Acknowledgements

 

[1] Source: Health Protection Surveillance Centre (HSPC)

[2] The beginning of the fourth wave coincided with the end of the third