Northern Irish recovery under threat
Published: 04 August, 2010
BELFAST: The construction sector and related industries in Northern Ireland are continuing to contract and the regions economy will grow by 0.8%, according to the latest economic research from Northern Bank.
The bank has revised its growth forecast downwards from the 1% it previously because of impending public sector.
In its quarterly forecast published today the bank said Northern Ireland has a "20%" chance of falling back into recession and warns that the North's economy is unlikely to bounce back to its pre-recession healthy position soon.
Angela McGowan, Northern Bank's chief economist said she believed the region had the potential for sound economic growth in the long term. But in the immediate future growth would be weak.
Ms McGowan believes Northern Ireland will face a major challenge adjusting to the "new equilibrium" that the drive to achieve a more balanced public/private sector will deliver.
Northern Bank has indicated that it expected the strict austerity measures set out in the last British budget to improve public finances would have a positive long-term effect. But the bank, which itself has struggled in the local economy, has predicted the British government's strategy could result in job losses in the short term.
Ms McGowan said: "The budget that was delivered in June was particularly hard on the Northern Ireland economy given it targeted public spending and welfare benefits. The local economy, which is currently very dependent upon the public purse, will naturally find this adjustment to reduced state support particularly challenging."
She said: "The sharp falls of late 2008 and early 2009 appear to be over for the manufacturing sector, and although building supplies and construction-related manufacturing remain muted, those sectors such as food production, electronics and pharmaceuticals continue to provide strength."