Extensive modelling and analysis were undertaken for the three Economic Considerations for Reinstating Economic Activity papers developed by my Department at phases 1, 2 and 3 of the Roadmap for Reopening Society and Business. These three papers, which are available on my Department's website gov.ie, were developed in conjunction with the Department of Finance and the Department of Public Expenditure and Reform and provide an assessment of the economic impact of the Covid-19 pandemic. Some other Departments also provided sectoral input based on their analyses. The papers also drew on international analysis from organisations such as the OECD, the ECB, Copenhagen Economics and Oxford University.
The economic impact of Covid-19 has not been uniform across all sectors of the economy. Based on the analysis from the Department of Finance's stability programme update and a more detailed sectoral and labour market analysis provided by the Department of Public Expenditure and Reform, the most heavily-impacted sectors are accommodation, food, construction, administration and support services, wholesale and retail and other personal services. Evidence for this includes the number of employees availing of the temporary wage subsidy and the pandemic unemployment payment. Sectors like finance, service activities and information and communications technology are the least affected. These sectors rely much less on direct contact with consumers and service providers and much activity can be completed from home.
There has also been less of a direct impact on the manufacturing sector. Many manufacturing industries were considered as essential during the restrictions and continued operations, albeit adapting to ensure safe workplaces with social distancing. The fall in output will be limited given that pharmaceutical and other medical devices sectors account for the majority of output. Indeed, activity in the pharmaceutical sector largely continued throughout the restrictions. However, production in the indigenous sector is expected to be adversely affected, reflected in an annual decline in manufacturing production in the traditional sector in February and March this year.
There are some welcome signs of improvement in business activity and the economy. However, sectors that employ a lot of people, such as tourism, hospitality, arts, entertainment and other services that rely on social interaction, remain in serious difficulty and their recovery prospects are uncertain.
I am out of practice doing this. I will get shorter replies next time.
Additional information not given on the floor of the House.
The July stimulus package, to be announced shortly, will be of scale and speed. In considering the analyses, I see five areas which we should focus on in helping our enterprises in the future: income support, direct grants for businesses, cheaper finance, new opportunities for future jobs and support for the hardest hit sectors.