Northern Ireland should emerge from recession towards the end of the next year, a new report reveals today.
And the survey, by accountants PricewaterhouseCoopers, claimed that the province will suffer less from the recession than the rest of the UK.
Unemployment is below average and the end may be in sight for falling house prices, PwC added.
The local economy is set to decline by up to 3% this year. But if the downturn deepens and the banking crisis continues output could shrink even more, the economists’ Northern Ireland Economic Outlook warned.
Recovery should begin around the third quarter of 2010 but average growth will be almost zero that year, it added.
PwC’s chief economist Philip McDonagh said: “The current economic circumstances are without precedent and that makes forecasting recovery extremely hazardous.
“But grave as the problems are, Northern Ireland is less impacted than other regions of the UK or the Republic of Ireland and there are genuine opportunities to be grasped. The greatest challenge over the next few months is to restore confidence and not to become paralysed into doing nothing by the prevailing mood of gloom and doom.”
Labour force data indicates Northern Ireland is still performing well relative to both other UK regions and historic levels.
Mr McDonagh added: “While unemployment will rise sharply in 2009, possibly to over 50,000, we are not approaching anything like the levels of unemployment that Northern Ireland has experienced in the past.”
Unemployment at 5% is still well below the UK average of 6.3% and remains the lowest of the 12 UK regions.
The PwC report also suggests that although house prices fell by 28% last year the end of the decline may be in sight.
Mr McDonagh said: “Although the volume of transactions remains extremely low, they did increase in the last quarter of 2008, with over half of all sales relating to properties priced at less than £150,000. The dilemma is that banks remain unwilling to lend to buyers even on terms that were readily available before the housing boom.
“When bank confidence and liquidity returns so will the volume of house sales.”
The Economic Outlook considers exposure of different industries. Most sectors contracted in 2008 including:
- Average hotel occupancy fell 6.6% year on year with the latter part of the year seeing the steepest falls
- The construction downturn continued and in the last quarter of the year it decreased by 4%, a 7.6% year on year fall
- Business and financial sector output decreased by 5.7% in the year to September with employment down by 1,090
- There was a 6% rise in food and drink production, helping boost manufacturing output in the third quarter of last year. But engineering and other manufacturing fell by up to 3%
- Food exporters are benefiting from the weak sterling but the recession will limit growth.
- New car sales fell but there have been high levels of cross-border shopping because of the strong euro.