Northern Ireland economy expected to grow 6.2% in 2021 – Danske Bank

Northern Ireland’s economy is expected to grow by 6.2% in 2021, according to Danske Bank.

The northern biggest lender said the economy was likely to return to growth in the second quarter of this year after an expected contraction in the first quarter.

In its previous quarterly forecast, Danske Bank predicted the northern economy would grow 4.8% this year before accelerating to 5.8% in 2022.

But in a revised outlook released today, the lender’s Conor Lambe said economic growth in 2021 is likely to outperform next year.

As a result, the growth forecast for 2022 has been revised downwards from 5.8 to 4.5%.

“After an expected contraction in the first quarter of the year, the gradual easing of coronavirus restrictions throughout the second quarter has likely allowed Northern Ireland’s economy to return to growth,” said Mr. Lambe.

“Early UK-level indicators show a strong rebound in activity in April and May, and we expect something similar to have happened in Northern Ireland.”

The economist said the reopening of non-essential retail and hospitality businesses provided an outlet for pent-up consumer demand in the second quarter, prompting a recovery in spending.

Danske Bank forecasts growth of 19% for the accommodation and food services sector in 2021, with the hard-hit arts, entertainment and recreation sector growing by 15%.

“Assuming there is no further lockdown and the vaccine program rollout continues as planned, we expect the economy to continue to expand in the third and fourth quarters of the year,” added the economist.

Danske Bank also expects fewer job losses this year than expected.

It predicts an unemployment rate of 4.2% for 2021, down from its previous forecast of 5%.

“It is important to note that the Coronavirus Job Retention Scheme continues to support the labor market,” said Conor Lambe. “We expect to see a decline in employment numbers as the program unfolds and ends in September, but we hope that stronger economic growth and labor demand can limit the upside. unemployment.”

But the economist warned that uncertainty around new coronavirus variants and the potential for further shutdowns or periods of tighter restrictions remain a risk, which could lead to a revision of the stance later in the year.

Pat R. Madsen