Crisis in Europe will hit trade and tourism sectors here, warns bank
Difficulties in Europe will impact on Northern Ireland trade and tourism this year, according to a new report.
Northern Bank's latest Quarterly Sectoral Forecast has kept its 2012 growth forecast for Northern Ireland at a relatively stagnant 0.3% and estimates that the local economy will have grown by only 0.2% from April to June.
The document said that economic growth is fairly anaemic due to Northern Ireland's relatively limited export base, but adds that unemployment has not risen as fast as feared and consumer confidence, although relatively weak, improved in March, particularly with a summer of big tourism events in the pipeline.
However, the report has reiterated that difficulties in Europe will have a particular impact on Northern Ireland given the economic links in terms of trade and tourism. And after a relatively calm start to the year, global risks have recently increased as a result of the Greek crisis.
Highlighting the various business sectors, agriculture has recorded strong numbers with the food processing sector in particular maintaining good growth.
Manufacturing employment rose during 2011 with the food, pharmaceuticals and transport elements of the sector benefiting from last year's competitive pound and strong international demand.
Manufacturing is forecast to grow at 1.2% this year and by over 3% in 2013. The ICT industry is forecast to grow at 2.5% during 2012 and by over 4.5% next year, while the hospitality industry has had a good start to the year with hotel occupancy rates up by nearly 10% year on year.
The tourism sector is expected to grow at just over 1% this year and 3% next year. But public services will see no growth this year or next and construction and retail will also continue to experience a weak performance this year.
Northern Bank chief economist Angela McGowan said that the local economic picture remains one of "fragility".
"There are a number of sectors continuing to perform well, these are generally export orientated sectors, which may face new challenges this year in terms of weaker European demand and a less competitive currency," she said.
"The potential downside risks primarily stem from European problems, oil and exchange rate uncertainty.
"Exchange rates can have a big impact on the competitiveness of Northern Ireland exports. In addition, the slowdown in German manufacturing during April suggests that problems in peripheral European countries are starting to impact upon the traditionally stronger core countries."