The Taoiseach has said the Covid-19 virus could have an impact on the Irish economy. 

Speaking to the media this afternoon, he said it could result in a slowdown in growth in Ireland and a slowdown in global growth but he said this would rebound or bounce back. 

Leo Varadkar said the impact on the Irish economy would depend on what happens in China because it makes up 10% of world tourism and 10% of world trade.

He said the indications are that the Chinese economy is slowing down and may even go into recession, which would have a knock on effect on Ireland. 

Mr Varadkar said that the Irish economy is in good health and the exchequer returns indicate there was a strong economic start to the year.

There was 'head space' to deal with a slowdown, he said.

Earlier, the Minister for Finance said the economic impact of the outbreak could be reviewed to see if policy action is needed by Government. 

Paschal Donohoe's comments came as the OECD warned the virus presents the global economy with its greatest danger since the last financial crash.

Speaking on RTÉ’s Morning Ireland, OECD Chief Economist Laurence Boone said projected impacts on European growth could hit Ireland. 

"In our predictions, in both the best case scenario, and the downside scenario, we have a contraction of trade growth globally. That will have an impact on Ireland," Ms Boone said.

"In the downside scenario - where we look at the impact on Europe - it's a shock of the order of 1.2 percentage points of GDP. That will be something that will impact Ireland", she added. 

Mr Donohoe said: "What I will do as Minister for Finance is review the economic effect and see if a policy action is needed for government. 

"Of course, this is a concern on many different levels. We are all fully aware of the public health risk that is posed by the spread of this virus. From my point of view, what is also a concern is the economic effect of this public health risk developing.

"The OECD has now confirmed that this is something that has affected global economic growth that it means it is therefore inevitably going to have an effect on the performance of our economy, but what that effect will be and how long it will last for at this point in time we have further work to do before we can be clear on those effects". 

The minister qualified his comments by saying "at this point in the development of the virus it is simply too early to be able to calibrate what that effect will be. 
"When we are looking at what that effect could be on our economy it will be on an economy that currently at the moment is performing exceptionally strongly," he said.

Asked about the impact this could have on government formation, Mr Donohoe said that "its relevance to government formation discussions at the moment will depend on does it have an impact on our medium term growth forecast. 

"At this point in the development of coronavirus it is simply too early to say this", he added. 

"As we speak now in early March 2020, it is likely this virus will have an effect on the performance of our economy this year but our economy has also got off to a strong start in 2020. So, it is too early to call the definitive effect on this in 2020 let alone beyond 2020.

"But, I think given that this process in relation to government formation still has a fair bit of time to go as we better understand what is the impact of the coronavirus on global economic may influence some decisions that are made but it is simply too early to be clear on that. 

"We have an economy that is nearly at full employment, that performed very strongly last year, and that has had a very strong start in 2020.

"So while there will be an effect due to the spread of this virus from global growth - and therefore on Irish economic growth - because our economy is performing so well it will to an extent offset that kind of an effect. But again, it is early in this process, and we have further work to do to better understand the effect that it could have on our economy", he said.

Additional reporting by Cian McCormack