By Padraic Halpin
DUBLIN (Reuters) - A very strong economic recovery next year for Ireland following its COVID-19 lockdown now looks less certain, Deputy Prime Minister Leo Varadkar said on Monday, as data showed a slowdown in the reduction of coronavirus-related jobless payments.
Ireland's economy, which was the fastest growing in Europe before the pandemic hit, is forecast to contract by 10.5% this year and bounce back by 6% next year, the country's finance department predicted in April.
"I think to be frank the economic impact is going to be a lot worse than you or I may have thought back in March or April or when the government was formed (in June)," Varadkar, the business minister who was prime minister until June, told the Newstalk radio station in an interview.
"Back in March or April I would have said this is going to be a three-month phenomenon, a single quarter severe hit to the economy and that we would be in a very strong recovery by next year. That now looks less certain."
Ireland has been very cautious about exiting its lockdown. The government paused the complete reopening of the economy for a second time last week and also had to reimpose local restrictions for the first time.
The number of people claiming temporary coronavirus-related unemployment payments in Ireland has dropped 4% since last week, the second successive week of a marked slowdown in the rate of reduction.
The state is paying 262,500 people the Pandemic Unemployment Payment, down from a lockdown peak of 600,000, but a weekly fall of just 12,000. Another 370,000 employees are supported by a separate wage-subsidy scheme, down from 410,000 a month ago.
Analysts say the slowdown could keep the unemployment rate at double-digit levels in 2021. The jobless rate, including those receiving the COVID-19 payment due to run to April, fell to 16.7% at the end of July.
(Reporting by Padraic Halpin; Editing by Alison Williams and Hugh Lawson)