Bank says growth will be low and very slow
Northern Ireland could slip back into recession and, even if it doesn't, recovery will still be "painfully slow", a leading economist has warned.
Northern Bank chief economist Angela McGowan made the prediction on the foot of the bank's quarterly sectoral forecast, which said that factors, including high inflation, an oil price shock and the eurozone sovereign debt crisis all worked to keep local economic growth at a "very subdued level".
But Ms McGowan said the biggest contribution to economic growth stems from sectors that can target international markets.
Very modest growth rates are expected for a number of sectors including retail and distribution, health and financial services.
Television and film production in Northern Ireland, such as the filming of Game of Thrones, has also been credited with a forecast growth in the 'other personal services' sector.
But sub-sectors that rely on the domestic market such as retail, construction and service-based industries continue to struggle.
Ms McGowan called for the establishment of more new businesses and more companies operating at a global level.
She said the Executive must "concentrate on the fundamentals" by supporting research and development, education, skills, infrastructure, growing trade links and supporting enterprise.
The report indicates that the construction sector, which currently represents 6.5% of the local economy, has suffered contraction of 3.1% this year, with the related mining and quarrying sector expected to contract by 5.7%.
Public administration and education are expected to contract by around 1% with the former expected to contract by a further 3% in 2012 as a result of cutbacks in public spending.
The bank has maintained its annual growth forecasts of 1.1% for 2011 but has increased the chances of the economy slipping back into recession by five percentage points from 15% to 20%.
Ms McGowan said Northern Ireland still faces its own pressures stemming from public expenditure cuts, relatively low consumer confidence and subdued demand.
"The underlying picture for the Northern Ireland economy remains one of a painfully slow recovery," she said.
"In a similar fashion to the UK economy, Northern Ireland's recovery has been hampered by some global setbacks such as the oil price shock earlier this year.
"Growth is also being held back at a local level by declining private disposable income, a slump in private consumption and weak business investment stemming from heightened uncertainty.
"Without doubt economic conditions at this stage of the recovery are disappointing."
The forecast growth for 2011 - Northern Bank says chances of slipping into recession have increased