Northern Ireland economy ‘to grow 6%’ after spending pick up
Northern Ireland’s economy is expected to grow just over 6% in 2021 in an improved forecast from Danske Bank today.
The bank revised upward an earlier forecast of 4.8% growth to 6.2% as the economy recovers from the impact of Covid-19 and lockdowns.
But he warned that uncertainty over the future course of the pandemic was a risk to growth.
Chief Economist Conor Lambe said NI’s performance should emulate the UK, where available data showed a strong rebound in activity in April and May.
He added: “The reopening of non-essential retail and hospitality businesses provides an outlet for pent-up consumer demand, which has resulted in increased spending.
“Assuming there are no more bottlenecks and the roll-out of the immunization program continues as planned, we expect the economy to continue to expand in the third and fourth quarters of the year. . “
Danske Bank is also forecasting 4.5% growth for the economy next year. But the economy contracted in the first quarter, while a lockdown imposed from December 26 continued, although growth is expected to return between April and June.
Mr Lambe said the Coronavirus Job Retention Scheme (CJRS), in which the government paid 80% of the monthly wages of people whose jobs were affected by the lockdowns, had supported the labor market.
At last count, there were 99,400 jobs in Northern Ireland supported by the program.
However, as of today, employers must start contributing 10% of wages, rising to 20% in August and September, before the plan closes at the end of the month.
Mr Lambe said: “We expect the number of jobs to decline as the program rolls out and then ends in September, but we hope that the stronger economic growth and the demand for labor force work may limit the rise in unemployment. “
However, the bank predicted that due to the aid withdrawal, the average number of jobs in Northern Ireland would decline by 1.2% in 20201, before growth of around 1% returns in 2022.
And among the sectors, he predicts that those that have been hit hardest by the blockages – accommodation and food, as well as arts and recreation – will see the strongest growth as they rebound from the restrictions, increasing 19% and 15% respectively.
However, despite their rebound, they would face a drop in employment of around 6% this year.
Wholesale and retail trade is expected to grow around 6.6% this year and 5.5% next year, as consumer spending increases.
Manufacturing and construction are also expected to experience strong growth, in part because they were less disrupted by the most recent lockdown earlier this year.
However, they faced other challenges, Danske Bank said, related to rising costs and declining availability of raw materials.
And they were also expected to see jobs fall by 1% in 2021, but with a return to growth in 2022.
Danske Bank said there would be strong growth in professional services and the information and communication sectors.