Northern Ireland consumer spending propping up growth, think tank warns
Northern Ireland risks growing too dependent on consumer spending as a means of buoying up the economy, it's been claimed.
Global risks are also hampering growth, according to the latest forecast by the Ulster University Economic Policy Centre (UUEPC).
Recent job loss announcements at foreign direct investors such as Michelin - which will close its tyre-making facility in Ballymena in 2018 - and Bombardier - which is set to make 1,000 people redundant this year and next - are also a reminder of the vulnerability of the economy, the UUEPC said.
And it forecast modest economic growth for Northern Ireland of 1.6% for this year and 1.3% next year.
But the rate of growth would pick up to around 1.8% in 2018, the UUEPC added.
Gareth Hetherington, associate director at UUEPC, said economic performance had been healthy in the last two years. Around 45,000 net new jobs had been created from 2012 to the end of 2015 - a higher proportionate rate of job creation than elsewhere in the UK.
But he said job creation had been based on "domestic consumer spending" - a trend that could not be relied upon to sustain economic growth in the long-term.
"Economic performance has been reasonably strong over the past two years," the UUEPC's Mr Hetherington added.
"Indeed, since 2012, Northern Ireland has created more jobs proportionally than the UK as a whole.
"This is encouraging, but it is based on domestic consumer spending, which is positive in terms of creating employment across all parts of Northern Ireland but cannot be relied upon in the longer term."
Mr Hetherington said people in Northern Ireland had greater disposable income, which they were spending on the high street.
People felt like they had more money in their pockets because of the falling oil price - which has come down from a high of $115 in June 2014 to a recent low of $27.10.
And a recovery in house prices also left people more prepared to spend.
That higher spending was bringing jobs in retail and hospitality, but Mr Hetherington warned: "The key point is that the additional income is not being saved and spending is not being driven by Government spending, business investment or improved exports."
The outlook also said the economy here had contracted by around 10% from 2008 to 2012 - a steeper contraction than in the UK as a whole, where GDP had fallen by less than 6%.