Level 5 restrictions have led to households saving over €13 billion and an increase in bank deposits which in turn has fueled a 5% growth in core domestic demand this year according to Goodbody Stockbrokers.
Between January and March it is predicted there will be a fall in domestic demand but as restrictions ease in Q2 and the vaccine is rolled out the recovery will begin.
O’Leary explained that even with the partial opening in December between lockdowns there was a ‘significant pent-up consumer demand’ and there will inevitably be a ‘large rebound in consumer spending, with some unleashing of savings adding extra impetus to this trend’.
While it will be September before 70% of the population are vaccinated, a gradual reopening of the economy from March onwards will see an increase in sales across the board.
This recovery is backed up by Central Bank of Ireland reports albeit they see the impact taking hold later in the year. Although the impact of COVID-19 has been more severe on the Irish economy than the financial crisis of 2008, Gabriel Makhlouf, Governor of the Central Bank of Ireland said the economic forecast for late 2021 is positive.
He said: “Our latest economic analysis and forecasts suggest that while we must weather the lockdown – and subdued output – for another while yet, come the second half of the year, and assuming a successful deployment of the vaccine, the economy should begin to recover.
“Supported by strong government income support measures, we forecast modified domestic demand to increase by 2.9% this year, following an estimated decline of around 7.1% in 2020.” Further growth of 3.6% is expected in 2022.
“But of course, this remains contingent on key assumptions regarding COVID-19 developments.”
While the current mood is bleak it is clear that as the economy reopens there will be opportunities for brands to take advantage of pent up demand and increase consumer spend capacity.
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