North Ireland Economy to Grow at Faster Rate

Northern Ireland’s economy is predicted to grow by 1.2% this year but economists are warning that consumer spending power will be squeezed due to a rise in inflation.  

Danske Bank has revised up its 2017 forecast for economic growth in Northern Ireland. It had originally predicted the economy would grow by just 0.8% in 2017. And it believes the economy will grow by 1% in 2018, Irishnews reported.

“There were a number of positive data releases for Northern Ireland which pointed to a very strong end to 2016,” said Danske Bank economist Conor Lambe.

“Inflation has picked up in recent months and is likely to rise a bit further later in 2017 as the impact of the sharp depreciation of sterling continues to feed along the supply chain. We expect the average rate of CPI inflation in the UK to be around 2.8% in 2017 and 2.7% in 2018 and this will exert downward pressure on households’ purchasing power. As such, we expect consumer spending growth in Northern Ireland to slow both this year and next.”

The bank predicts the information and communication sector will see the largest expansion, rising by 4%, followed by the professional, scientific and technical sector, with 3.2% growth. But there are a number of “risks and uncertainties” which could impact on the Northern Ireland economy and hinder its growth this year and next, Lambe said.

That includes the ongoing political impasse at Stormont, and at Westminster, along with Brexit. “Following the outcome of the UK general election, which resulted in a hung parliament, political uncertainty is now at a more elevated level,” Lambe said.

“It remains to be seen whether the new government can bring about an increase in political stability, and indeed, what policy agenda it will pursue over the coming years.”