Businesses 'trying to be optimistic' despite challenges
Just 2% of businesses expect to see strong growth in the Northern Ireland economy over the next 12 months, according to a new survey.
Even though two-thirds of firms say their business is likely to expand during 2016; the overall outlook is much more bleak with one in five companies (21%) forecasting a contraction of the local economy this year.
Micro and small businesses are the least optimistic about the region's growth prospects for the year ahead.
Christopher Morrow, policy manager at the Northern Ireland Chamber of Commerce said: "The survey shows that businesses are trying to be optimistic about the year ahead, however there are a number of challenges facing them."
More than half of businesses also claimed political instability had deterred investors during 2015, particularly those from overseas.
However, it is hoped November's Fresh Start deal, which ended months of wrangling over finances and security issues, will project a more positive image.
Mr Morrow added: "It is reassuring that as a result of the Fresh Start Agreement, there is now a sense of stability coming from the Northern Ireland Executive."
Unsurprisingly competition and exchange rates topped the list of concerns but t he impact of proposed public spending cuts, the availability of skilled workers and rising energy costs were also raised.
The introduction of the National Living Wage in April was highlighted by tourism and hospitality chiefs -- with one company claiming it would have to cope with a £400,000 wage bill increase by 2020.
The findings form part of the latest quarterly economic survey compiled by the Chamber of Commerce and business advisers, BDO.
More than 300 companies took part in the study which looked at the last quarter of 2015.
Michael Jennings, partner at BDO, said: "Despite their optimism for business in 2016, many respondents do not expect the local economy to grow, noting concerns that the instability in the Northern Ireland Executive is holding back business investment.
"Such concerns should have been alleviated by the Executive's Fresh Start Agreement and the confirmation of corporation tax devolution in 2018, albeit that implementation could present its own difficulties.
"Proposed public spending cuts represent significant change for the local economy. However, it could prove to be a valuable opportunity for the private sector to gain access to skilled labour. Indeed, with continued focus on promoting local business, foreign direct investment and economic growth, it is hoped the private sector will be able to absorb many of the employees being released from the public sector."