The report, by Oxford Economics, suggests that Wales will lose more economic output and employment than the UK average in 2020.
With a heavy dependency on manufacturing, the Welsh economy has been hit particularly hard because of the impact of lockdown on both the workforce and the supply chain.
The Welsh economy is expected to recover more slowly than the UK average in 2021, economists said, and although employment is forecast to improve as the economy recovers, there will be fewer jobs in 2021 than there were in 20191, pre-virus.
Martin Warren, ICAEW Regional Director for Wales, said:
“Coronavirus has had a profound effect on the Welsh economy, with the manufacturing sector contracting sharply during the lockdown.
“As measures are eased, it is vital that a sustainable economic recovery beyond the crisis is achieved in Wales.
“The combined effect of the UK Government schemes and the targeted Welsh Government support has helped to contain redundancies and company failures so far. It will be extremely important that these are withdrawn in a balanced way to maintain this climate and restore business and consumer confidence.”
Richard Holt of Oxford Economics, added:
“Rather than levelling up the different parts of the UK by focusing on growth, it is possible policymakers will instead focus on greater resilience to combat both one-off shocks, such as the coronavirus pandemic, and longer-term structural problems such as unemployment.”