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Covid-19 Pandemic

Dáil Éireann Debate, Tuesday - 22 February 2022

Tuesday, 22 February 2022

Questions (255)

Bernard Durkan

Question:

255. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he expects the economy to make a full recovery notwithstanding the impact of Covid-19; if the manufacturing and services sectors are likely to recover simultaneously; and if he will make a statement on the matter. [7049/22]

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Written answers

By the third quarter last year, both output and employment had exceeded pre-pandemic levels, a remarkable outcome that speaks to the success of the Government’s economic policies, which protected incomes, jobs and businesses.

It is important to note however that the Covid-19 shock has had a disproportionate and negative impact on certain sectors, in particular on labor-intensive service sectors, where home-working was not possible.  Nevertheless, since the re-opening of the economy in spring of last year, the service sector has seen a rapid recovery, with the overall service sector output exceeding its pre-pandemic level (January 2020) by 11½ per cent in December 2021. Of course, the recovery has not been uniform across service sub-sectors and activity remains below the pre-pandemic level in the majority of these sectors, with the exception of ICT and Wholesale and Retail Trade.  Indeed the recovery in these services sub-sectors stalled somewhat towards the end of last year during the height of the Omicron wave.

On the other hand, ‘knowledge-intensive’ sectors proved more resilient. For this reason the ‘’modern manufacturing sector’’ which is dominated by pharmaceutical and other MNEs performed strongly throughout the Pandemic. Perhaps more importantly, production in the ‘’traditional sector’’ is performing solidly having grown by over 5 per cent in the final quarter of 2021 compared to the previous three months.

Looking ahead, a range of business surveys suggest a continuing strong rate of growth in both the manufacturing and services sectors, as both international and domestic demand recovers. The lifting of many of the remaining domestic restrictions in January this year is an important tailwind for the services sector. My Department will continue to closely monitor and analyse these developments and will publish updated economic forecasts as part of the Stability Programme Update in April.

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