Modest growth predicted as Brexit and spending still raise concerns
Consumers will face pressure on their spending power and Brexit uncertainty will continue to weigh on businesses in a year of modest economic growth, a survey said today.
The Northern Ireland quarterly sectoral forecasts from Danske Bank estimate the NI economy will grow by 1% in 2018 and expand slightly to 1.2% in 2019.
Danske Bank said that nearly all sectors of the economy are expected to grow this year and next, with the exception of public administration and defence.
Conor Lambe, Danske Bank chief economist, said: "After rising last year, we think that inflation has now passed its peak and expect it to slow through 2018 and 2019.
"However, given that the decline in inflation is likely to occur only gradually, consumers will still face some pressure over the next two years.
"Local consumer spending growth is projected to pick up slightly, but the expected 0.7% increase in 2018 is still relatively modest."
The administration and support sector is expected to be the fastest growing in Northern Ireland in 2018 with expansion of 3.5%.
And that is set to be closely followed by the information and communication sector, which would grow by 3.4%.
The professional and scientific sector is tipped for expansion of 2.6%, while the wholesale and retail trade sector will expand by 1.3% this year and 1.1% next year. But jobs in the wholesale and retail sector would shrink by 0.3% this year and by the same amount next year.
Danske Bank's report said: "While some easing of the squeeze on household spending is expected, this consumer-focused sector is forecast to stay under strain."
And despite a series of high-profile job losses in the sector, the manufacturing sector will expand, albeit at a relatively weak rate of 1% this year and 1.2% next year. The number of manufacturing jobs is expected to increase by 0.7% in 2018, and 0.4% in 2019.
And construction output is projected to increase this year and next year by 0.7%, expanding to hit growth of 1.1% next year. It would experience employment growth of 2% - with the same level of growth for administration and support.
However, Danske Bank added that risks and uncertainties could hit.
Mr Lambe said: "Stormont's political stalemate is continuing into a second year, with seemingly no current prospects of restoring the devolved institutions.
"The lack of political representation has led to the postponement of big issues such as healthcare reform, and the length of the impasse has caused frustration within the Northern Ireland business community.
"The Brexit negotiations are continuing following the sign-off by the EU's political leaders of a 21-month transition period from when Brexit formally occurs in March 2019.
"Given the December deal and the agreement on a transition period, the chances of a no deal outcome are now less than they were just a few months ago, although there are still a number of issues to be negotiated.
"At present, the most pressing issue is the Northern Ireland border, including how the 'backstop' arrangement will be written into the agreement."