It is becoming clear that Economists are struggling to interpret the views of Epidemiologists. In March of this year I attended a presentation given by the Economist Austin Hughes of KBC Bank. During the presentation he presented a chart that showed the consensus views of leading Economists on the impact of Covid on Europe’s GDP. The chart showed a negative impact of 2%. We now know that view was wildly inaccurate.
Yesterday I was delighted to be part of a panel of experts on a webinar organised by Omnipro (their Company Law Conference 2020.) One of the other speakers was the Economist Constantin Gurdigiev. His charts showed that Irish GDP will grow by 5.7% in 2021.
The reality is that it is very difficult to make any accurate forecasts. Yes, the “hardcore” elements of the Irish economy will continue to do well, such as Pharma and IT. However, other industries will continue to suffer from Covid.
Economists love statistics. However, the “domino” effect of Covid is difficult to translate into statistics. Who would have thought six months ago that Irish meat plants would now be making burgers out of sirloin steaks for sale in Tesco in the UK, as demand for sirloin steaks fell off the cliff following the closure of restaurants? The lack of demand for prime cuts of beef led to cattle prices tumbling by €200 a head, causing difficulties for beef farmers.
Every day of the week we are dealing with new categories of clients that are suffering from the domino effect of Covid. These clients range from architects to musicians.
There are thousands of businesses who are currently dependant on generous Government support. However, as the Government support is pared back many of these businesses will have to close. The domino effect of those bad debts on their suppliers will be significant.
I do hope that Constantin’s prediction that Irish GPD will grow by 5.7% in 2021 is close to the ballpark.