Ireland’s total retail savings and investments market is set to shrink by 5.3% in 2020 against the previous forecast of 4.3% growth due to the impact of COVID-19, according to GlobalData, a leading data and analytics company.

According to GlobalData, unemployment rate will reach 25% in the second quarter (Q2) of 2020. The country is expected to go into recession, which will see savings, especially riskier ones decline.

Heike Van Den Hoevel, Senior Wealth Management Analyst at GlobalData, comments: “The ongoing disruption to the economic activity has had a major impact on financial markets, and risk assets are forecast to take the biggest hit as the nationwide lockdown continues to cause an extensive loss of activity across industries. The ISEQ, Ireland’s flagship index, has lost 22% since the beginning of the year, and while it showed signs of life towards the end of March, the ongoing uncertainty and the lost productivity will continue to have a negative impact on risk assets. Performances are expected to be volatile for the foreseeable future.”

Following the pattern during the 2007-08 global financial crisis, retail deposit holdings – which make up 56% of the retail mix – are set to benefit modestly from a flight to safety, with higher growth in 2020 than GlobalData previously forecasted.

Van Den Hoevel concludes: “The proportion of household savings devoted to deposits will increase significantly, albeit mainly due to the decline in equity and mutual fund values rather than consumers pouring money into savings accounts. The boost to deposits will be tempered by households drawing down savings during the recession following the crisis.”