Northern re-adjusts its growth forecasts
One of Northern Ireland's big four banks has today downgraded its growth forecast for the local economy.
Northern Bank had predicted the Northern Ireland economy would grow by 1% this year, however, it has now revised that figure down to 0.8%.
The bank's chief economist, Angela McGowan, said: "While downward revisions to economic growth are of course disappointing, it is important to remember that the economy is still in recovery mode and the chances of falling back into recession are now just one in five.
"Northern Ireland has the potential for sound economic growth in the long-term through growing our private sector but without doubt growth in the short-run will be weak.
"It will of course mean that the necessary adjustment to a new equilibrium, in terms of public/private sector balance, will not be without some difficulties."
Northern Bank's latest Quarterly Sectoral Forecasts report also forecasts 2% growth for 2011 but it warned there is still considerable ground to cover before the economy's economic output is back to pre-recession levels.
Ms McGowan explained: "The UK budget that was delivered in June was particularly hard on the Northern Ireland economy given that 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."
The report found that overall, the Northern Ireland economy is expected to grow with some sectors such as manufacturing and agriculture performing better than others and some components of the economy, construction in particular, still requiring 'intensive care'.
Of the large sectors, positive growth will be experienced in business services (1.8%), manufacturing (0.8%) and retail & distribution (2.1%).
But challenges for the retail sector will remain due to January's hike in VAT and the fact that disposable household income is set to be squeezed with higher taxes and low growth in earnings, added Ms McGowan.