DAVY VIEW

May’s exchequer returns were far better than expected, with tax revenues €2bn ahead of official projections, mainly reflecting buoyant corporation taxes. However, resilient income taxes and VAT receipts suggest that the COVID-19 hit to GDP and employment hasn’t been as bad as feared. This suggests that our forecast for Irish GDP to contract by 20% in Q2 2020, employment to fall by 23% and a deficit of €29bn (9% of GDP) in 2020 may be too pessimistic.