Central Bank Governor warns that another lockdown would collapse the economy

Dublin: The central bank governor has issued a warning as the country faces the threat of a lockdown in the Covid crisis. The Central Bank head, Gabriel Makhlouf has warned that the lockdown could have serious repercussions on the economy and society.

He was speaking at a virtual seminar hosted by the economic think-tank the Institute of International and European Affairs.

The virus will not go away in a few months. Gabriel Makhlouf also said that we need to learn how to live with it. Living with it means continuing economic activity as best you can. That’s what we need to do if we are sure we can get rid of the virus in no time, he added.

CSO figures confirm that Ireland entered a recession in the second quarter of the year. The pandemic caused a 6.1 percent drop in GDP. He said the current recession would lead to an increase in debt.

But as a legacy of the Covid crisis, Ireland must be careful to avoid over-indebtedness through the central bank and personal lenders.

The world after Covid-19 will be different in many ways, there may be new structural changes in the economies and the changes may be positive or negative. We need to be able to deal with it, said the Central Bank Governor.

At its first council meeting in July last week, the European Central Bank cut interest rates to an all-time low. Makhlouf said he thinks the rate is going to stay the same.

Fear of corona, weak labor market, rising uncertainty and high precautionary savings will lead to reduced demand for goods and services.

He added that this indicates that interest rates will stay low and inflation is likely to speed up.