Has recession bottomed out for Northern Ireland?
Hopes that Northern Ireland’s economy downturn had bottomed out received a boost today with a number of upbeat assessments.
Positive views of the local economy, the housing market and retail sales suggested that the long awaited “green shoots” of recovery may soon be visible.
Ulster Bank economist Richard Ramsey said today that he believes the worst of the recession could be behind us and that the property market slowdown is running out of steam.
In the bank’s latest Quarterly Economic Review, the economist said: “Respected indicators such as the UK PMIs suggest that the pace of contraction in the economy is slowing and, in global terms, levels of trade are picking up.”
He added: “It is our belief that the very worst of the downturn is behind us and, whilst the Northern Ireland economy will experience a deep contraction of around four per cent this year, we expect it to return to modest growth in 2010.”
Meanwhile the Organisation for Economic Co-operation and Development (OECD) said its latest data showed the UK was showing “tentative signs” of a pause in the economic slowdown.
The organisation, which comprises most of the world’s industrialised economies, said that while the British economy has not yet reached its lowest point, the pace of decline will slow and recovery may come earlier than in much of the rest of the world.
There were also signs of life returning to the local property market, as local figures from the Royal Institute of Chartered Surveyors showed house sales rose for the third month in a row.
A majority of surveyors said house sales had increased in the past three months and two-thirds of the property professionals in the province said they expect sales to continue to rise for another three months.
The beleaguered high street also got some much needed good news as the British Retail Consortium reported that sunny weather and a late Easter holiday last month had resulted in retail sales growing at their fastest rate in three years.
Spurred on by the spring sunshine, shoppers bought summer clothes, gardening gear and camping equipment, the figures showed.
The research showed that like-for-like comparable sales values across all categories bounced up 4.6% in April, compared to a decline of 1.2% in the previous month.
However, all of the assessments were tempered by the warning that it is too early to say the economy is fully on the road to recovery.
Mr Ramsey warned that Northern Ireland still faces growing pressure on public spending that will require the Executive to accelerate public sector reform as it is forced to make efficiency savings by Whitehall.
The economist also tipped unemployment in the province to rise above 8% by the end of 2009. RICS said while the rise in sales was also accompanied by more buyer enquiries, the housing market is coming from a low ebb and is still some way from healthy.
“The fact is that while transaction levels are increasing, they still have some way to go and prices in some sectors of the market might have further to correct,” cautioned RICS spokesman Tom McClelland.
The BRC said that while the rise in sales — which is the largest leap since April 2006 — is good news for the battered retail sector, the figures were mainly driven by a sunny Easter this April, compared with the same month last year, when cold, wet weather dominated after a March holiday.
And a new survey by Goldblatt McGuigan released today showed that one in four businesses in Northern Ireland are still battling to survive the recession.
Some 36% of local firms surveyed described their main objective for their businesses at the moment as simply to survive.
And a massive 60% of respondents said they had suffered a drop in sales in the first three months of 2009, compared to a year earlier.
The OECD admitted that while the UK economy may stabilise before other nations such as the US, Japan and Germany, the signs of recovery remain weak.