Moody’s says pace of vaccine rollout is key risk to Irish economy

The pace of the Covid-19 vaccination remains a key source of risk for the Irish economy, Moody’s said on Wednesday.

The warning came as the government revised the framework for the continuation of the immunization program.

The influential rating agency said in its annual sovereign report for the Republic that it expects gross domestic product (GDP) to grow by 3% this year as the multinational sector continues to outperform the economy. national.

“Developments related to the pandemic and the pace of vaccinations are key sources of uncertainty and pose downside risks to the economic recovery,” Moody’s said.

“Beyond 2022, we expect growth to continue to hover around 3%. Although this figure is lower than in the run-up to the pandemic, Ireland will continue to outperform most of its eurozone peers, supported by the high competitiveness and productivity of the multinational sector as well as favorable demographics. “

More than 15% of the Republic’s adult population has received at least one dose of a Covid-19 vaccine, compared to over 50% in the UK, as deployment in the EU has been hampered by problems.

Taoiseach Micheál Martin said on Tuesday that the government is changing the deployment to base it on age once the most vulnerable people and people over 70 have been vaccinated, rather than following the current priority list. He said the move would simplify and speed up the program.

Mr Martin also said nearly 3 million doses of the vaccine would be administered by the end of May, rising to nearly 5 million doses in early July and 6 million doses by the end of this month.

Loan defaults

Meanwhile, Moody’s said that although defaults have not increased since the start of the pandemic, the scale of the problems “has yet to emerge as the government begins to phase out support measures. linked to the pandemic “.

“Positively, the majority of borrowers who opted for repayment holidays in 2020 have resumed full repayment, easing the pressure on problem loan formation. In addition, banks have largely anticipated their cost of provisioning [for expected loan losses].

“Asset quality should therefore remain a source of vulnerability for Irish banks in the years to come. However, we believe the system has enough buffers to absorb the shock of the pandemic. “

Moody’s said it expects a contraction in housing supply due to the pandemic will likely maintain “upward pressure on house prices to continue in the years to come.”

A report from real estate website Daft.ie found on Wednesday that house prices rose on average 7.6% in the first quarter of the year compared to the same period in 2020.

Daft.ie said the total number of properties available for purchase on March 1 of this year was just under 12,000, the lowest level in 15 years. The overall figure was down 40 percent from the same period last year.

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