Stability Programme Update - Summary April 2021
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Stability Programme Update – Summary April 2021 Prepared by Economics Division Department of Finance finance.gov.ie Department of Finance Stability Programme Update 2021 - Summary
Summary
˃ Modified domestic demand – which consists of consumer and government spending, as well as
‘normal’ investment – is projected to pick-up moderately from the second quarter as restrictions are
gradually eased.
˃ The pace of increase should accelerate over the second half of the year, resulting in an annual
average MDD growth rate of 2½ per cent in 2021 (GDP +4.5 per cent).
˃ MDD should accelerate in 2022 as containment measures are phased out; a growth rate of 7½ per
cent (GDP +5 per cent) is projected. This, in part, reflects a ‘catch-up’ period as pent up consumer
and business spending drives above-trend growth.
˃ On the basis outlined, the level of MDD would revert back to its pre-pandemic level by the
fourth quarter of 2021. Notwithstanding reversion to trend growth rates by 2023, the level of MDD
and consumption at the end of the forecast horizon would still be below the level suggested by their
respective pre-pandemic trends (Figures 3a and 3b), with employment also lagging.
˃ A deterioration in the epidemiological situation would delay the recovery and could increase the
‘scars’ associated with the pandemic. In a downside scenario the Irish economy would be
approximately 4½ per cent smaller by the end of next year than it would under the baseline
forecasts.
˃ The labour market has borne the brunt of the pandemic, with the number of hours worked at the
end of last year 9½ per cent below the pre-pandemic peak. Contact-intensive sectors have been
most severely affected.
˃ For next year, an additional (net) 226,000 (+11 per cent; 2022) jobs are projected to be added,
though the level of employment will remain below the pre-crisis level in 2019 until the first quarter
of 2023.
˃ The unemployment rate is projected to average around 16¼ per cent this year, before declining
to 8¼ per cent in 2022 as the economy is fully re-opened.
˃ The unemployment rate is forecast to fall to a rate of 5½ per cent in 2025, remaining above the
pre-pandemic rate of 5 per cent on average for 2019, reflecting some scarring.
˃ Government has mobilised substantial resources to limit the short-term impact of the pandemic
and to minimise longer-term ‘scarring’ effects.
˃ A general government deficit of €18.4 billion (5 per cent of GDP; 8.9 per cent of GNI*) was recorded
last year. The Department is projecting a deficit of €18.1 billion (4.7 per cent of GDP; 8.4 per cent
of GNI*) this year.
˃ A deficit of €11.6 billion (2.8 per cent of GDP; 5 per cent of GNI*) is projected for 2022; this is
contingent upon the assumption that most of the emergency temporary supports are withdrawn at
end-2021.
˃ Public indebtedness amounted to €218.2 billion, 105.6 per cent of GNI* last year.
˃ Public indebtedness is projected at €239.3 billion this year, the equivalent of 111.8 per cent of
GNI*; this would put the Irish debt-income ratio amongst the highest in the developed world.
˃ While public indebtedness has increased, the burden of public debt has fallen, largely reflecting
the decline in interest rates associated with large-scale central bank purchases of sovereign debt.
Department of Finance Stability Programme Update 2021 - SummaryTable 1: summary – main economic and fiscal variables, per cent change (unless stated)
2020 2021 2022 2023 2024 2025
Economic Activity
Real GDP 3.4 4.5 5.0 3.5 3.2 3.1
Real GNP 0.6 4.4 4.5 2.8 2.6 2.5
Modified Domestic Demand -5.4 2.6 7.4 3.8 3.4 3.4
Real GNI*^ -4.2 2.5 5.5 3.0 2.7 2.7
Prices
HICP -0.5 1.1 1.9 1.5 1.6 1.9
Core HICP -0.1 0.7 1.7 1.5 1.6 1.9
GDP deflator -0.5 0.4 1.8 1.5 1.6 1.6
Balance of Payments (per cent of GDP)
Trade balance 30.0 40.5 38.7 37.9 37.1 36.6
Current account 4.6 15.1 13.1 11.8 10.7 9.8
Labour Market
Total Employment (‘000)^ 1,972 2,051 2,276 2,351 2,405 2,457
Employment -15.1 4.0 11.0 3.3 2.3 2.2
Unemployment (per cent) 18.7 16.3 8.2 6.7 6.0 5.5
Public Finances (per cent of GDP, unless stated)
General government balance -5.0 -4.7 -2.8 -1.2 -0.7 -0.2
Structural budget balance* -0.5 -1.0 -1.9 -1.2 -0.9 -0.4
Debt ratio (year-end) 59.5 62.2 60.2 59.0 57.7 55.4
Debt ratio (per cent of GNI*)^ 105.6 111.8 107.4 105.8 103.9 100.1
Net debt position (year-end)~ 51.2 54.3 54.1 53.0 51.6 49.7
* estimates of the structural budget balance are subject to even greater uncertainty than normal.
^ GNI* is based on GNI less depreciation of R&D-related service imports and trade in IP, depreciation of aircraft
for leasing, and net factor income of re-domiciled PLCs.
~ net debt figures from 2021 estimated by mechanical extrapolation of assets.
Labour market data reported on a ‘covid-adjusted’ basis.
Source: CSO for 2020 and Department of Finance 2021-2025. 2020 GNI* also estimated by Department of
Finance
Department of Finance Stability Programme Update 2021 - SummaryFigure 1a: incidence rate; 14-day m.a. per 100k Figure 1b: the Israel experience
2,500 100 100
IL % Population Vaccinated
IE % Population Vaccinated
90
wave 3 Israel Stringency
wave 1 wave 2
90 Ireland Stringency
2,000 80
other
EU
70
80
IE
Population Vaccinated %
1,500 60
Stringency Index
70 50
1,000 40
60
30
500 UK 20
50
10
0 40 0
03/2020
04/2020
05/2020
06/2020
07/2020
08/2020
09/2020
10/2020
11/2020
12/2020
01/2021
02/2021
03/2021
04/2021
11/2020
12/2020
01/2021
02/2021
03/2021
04/2021
Source: figures a & b = John Hopkins, Our World in Data.
Department of Finance Stability Programme Update 2021 - SummaryFigure 2a: contributions to changes in GDP; pp Figure 2b: contributions to changes in MDD; pp
10.0 10.0
projections projections
8.0
8.0
6.0
6.0
4.0
4.0
2.0
2.0
0.0
0.0
-2.0
MNX Personal consumption
-2.0 Public consumption
Stocks and Statistical Discrepancy -4.0
Construction
MDD Other Modified Investment
-4.0 Modified domestic demand
GDP -6.0
-6.0 -8.0
2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025
Modified domestic demand represents the sum of private consumption, public consumption and investment excluding stocks, investments in aircraft by the leasing sector and
net R&D imports. Modified net exports is net exports (exports less imports) excluding investments in aircraft by the leasing sector and net R&D imports. Other modified
investment is machinery and equipment excluding investments in aircraft by the leasing sector, plus domestic R&D. Source: figures a & b = CSO, Department of Finance.
Department of Finance Stability Programme Update 2021 - SummaryFigure 3a: modified domestic demand; 2018 prices € million Figure 3b: personal consumption; 2018 prices € million
60,000 34,000
MDD Consumption
32,000
55,000
2013-2019 Trend 2013-2019 Trend
30,000
50,000
28,000
45,000
26,000
40,000
24,000
35,000
22,000
30,000 20,000
2007Q1
2008Q1
2009Q1
2010Q1
2011Q1
2012Q1
2013Q1
2014Q1
2015Q1
2016Q1
2017Q1
2018Q1
2019Q1
2020Q1
2021Q1
2022Q1
2023Q1
2024Q1
2025Q1
2007Q1
2008Q1
2009Q1
2010Q1
2011Q1
2012Q1
2013Q1
2014Q1
2015Q1
2016Q1
2017Q1
2018Q1
2019Q1
2020Q1
2021Q1
2022Q1
2023Q1
2024Q1
2025Q1
Source: figures a & b = CSO and Department of Finance
Department of Finance Stability Programme Update 2021 - Summary1500
1700
1900
2100
2300
2500
Q1 2016 2700
Q3 2016
Q1 2017
Q3 2017
Q1 2018
Q3 2018
Q1 2019
Q3 2019
Q1 2020
Q3 2020
Q1 2021
Q3 2021
Figure 4a: employment levels; 000
Q1 2022
Source: figures a and b = CSO and Department of Finance
Q3 2022
Q1 2023
Department of Finance Stability Programme Update 2021 - Summary
Q3 2023
Q1 2024
projections
Q3 2024
Q1 2025
Q3 2025
0%
10%
15%
20%
25%
30%
5%
Q1 2016
Q3 2016
Q1 2017
Q3 2017
Q1 2018
Q3 2018
Q1 2019
Q3 2019
Q1 2020
Q3 2020
Q1 2021
Q3 2021
Q1 2022
Q3 2022
Q1 2023
Q3 2023
Figure 4b: unemployment rate, per cent
Q1 2024
projections
Q3 2024
Q1 2025
Q3 2025Figure 5a: general government balance, per cent GDP Figure 5b: Ireland’s deficit in context, per cent GDP
5.0
0.0 0.0
-5.0
-2.0
-10.0
-15.0
-4.0
-20.0
-25.0
-6.0
General Government Balance as a % of GDP
-30.0
General Government Balance as a % of GNI*
-35.0
-8.0
-40.0
-45.0 -10.0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
ES GR IT BE FR EE SK EA LV AT SL LT MT DE PT IE NL FI CY LU
Source: figure a: CSO and Department of Finance; figure b: IMF World Economic Outlook April 2021
Department of Finance Stability Programme Update 2021 - SummaryFigure 6a: general government debt, per cent of GDP/ GNI* Figure 6b: debt service costs, per cent
180 General Government Debt-to-GDP 4.5
General Government Debt-to-GNI*
SGP Threshold
160 4.0
projections projections
140 3.5
120 3.0
100 2.5
80 2.0
60 1.5
40 1.0
20 0.5
0 0.0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Source: figures a & b = CSO and Department of Finance
Department of Finance Stability Programme Update 2021 - SummaryTable 2: Chronology of the pandemic
Date Key development
December 2019 31 China informs WHO of a number of ‘flu-like’ cases in Wuhan
January 11 First confirmed death from coronavirus recorded in China
13 First case outside of China detected, in Thailand
24 First confirmed European cases of Covid-19 reported in France
February 29 First case recorded in Republic of Ireland
March 8 Global confirmed Covid-19 cases surpass 100,000
11 WHO declares ‘global pandemic’; first confirmed Covid -19 death in Ireland
12 Schools, colleges, childcare facilities in Ireland shut for two-week period
13 WHO declared Europe the ‘epicentre’ of the pandemic
16 Irish Government establish pandemic unemployment payment (PUP)
18 ECB announces €750 billion Pandemic Emergency Purchase Programme (PEPP)
24 TWSS announced. All non-essential shops in Ireland close, all sporting events
cancelled
27 Ireland enters ‘lockdown’
April 2 Cases top 1 million worldwide
10 Global death toll surpasses 100,000
May 1 Ireland extends lockdown to 18 May; Roadmap to reopening announced (May–Aug)
18 Phase 1 commences, including some easing of restrictions on workplace attendance
June 4 ECB boosts bond-buying PEPP stimulus package by €600bn to €1,350bn
8 Phase 2 commences, including opening for all retail outlet
29 Phase 3 commences, travel restrictions end, personal services and bars serving
food reopen
July 13 Face coverings compulsory on public transport
15 Phase 4 deferred as reproductive rate rises
20 EU leaders agree €750bn stimulus deal
23 Government of Ireland announces July Stimulus package, worth €5.2 billion
August 7 Regional lockdown in Kildare, Laois, and Offaly
September 18 Dublin moves to Level 3
29 Global deaths surpass 1 million
Department of Finance Stability Programme Update 2021 - SummaryOctober 7 Ireland enters National 3 lockdown
13 Ireland unveils record budget package to tackle Covid-19 recession
21 Ireland is first EU country to re-enter national lockdown - ‘Level 5’
31 France, Germany, UK, Greece and Belgium follow Ireland in implementing fresh
restrictions
November 9 Pfizer and BioNTech announce preliminary results for a 90 per cent effective vaccine
11 EU signs deal for 300 million doses of Pfizer and BioNTech vaccine
18 Covid-19 death toll in Ireland reaches 2,000
December 1 Ireland moves to Level 3, non-essential retail reopens
2 UK becomes first Western country to approve a Covid-19 vaccine
14 New and more transmissible strain of Covid-19 (B.1.1.7) identified in the UK
28 Vaccine rollout begins in Ireland
29 Ireland re-enters Level 5 national lockdown
January 8 Ireland reports peak of over 8,200 daily cases
11 Ireland's daily Covid-19 rate per million people highest in the world
26 Government extends Level 5 restrictions to March 5
29 AstraZeneca Covid-19 vaccine is approved in the EU
February 15 Location of 37 mass vaccination centres announced
17 4,000 deaths in Ireland
26 5 per cent of people in Ireland have received first dose of the Covid-19 vaccine
March 11 US adopts $1.9 tn Covid-19 stimulus package
14 Ireland temporarily suspends use of AstraZeneca vaccine amid blood clot concerns
30 Phased easing of Covid-19 restrictions announced
April 8 Ireland administers 1 millionth Covid-19 vaccine
Note: table does not purport to be fully comprehensive – its purpose is to provide an overview of the key
developments, as they impacted on Ireland, and their timeline.
Source: Department of Finance.
Department of Finance Stability Programme Update 2021 - SummaryTithe an Rialtas, Sráid Mhuirfean Uacht,
Baile Átha Cliath 2, D02 R583, Éire
Government Buildings, Upper Merrion Street,
Dublin 2, D02 R583, Ireland
T:+353 1 676 7571
@IRLDeptFinance
www.gov.ie/finance
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