Belfast Telegraph

Northern Ireland sees out 2016 'with a bang', but headwinds loom

By Margaret Canning

Northern Ireland's economy ended 2016 "with a bang" as output grew by 2.1% in the fastest quarterly growth in 12 years, according to the latest statistics.

And figures for the full year suggested efforts to rebalance the economy away from its dependence on the public sector were paying off.

But overall economic performance was still languishing below pre-credit crunch levels.

Ulster Bank chief economist Richard Ramsey said: "The private sector expanded by 2.6% quarter-on-quarter, with output up 4.1% year-on-year.  The latter marked the fastest rate of growth in a decade and helped to propel output to its highest level in over eight years."

Output also increased by 2.1% over the final quarter of 2016, according to the Northern Ireland Composite Economic Index (NICEI). It's the second index to be produced since the EU referendum of June 23 - but the NI Statistics and Research Agency (NISRA), which produces the index, added: "The post-referendum picture is still emerging and will continue to do so over the coming quarters and years.

"It is not possible to separate out the specific impact of the referendum in this quarter."

The expansion at the tail end of 2016 was driven by growth in the services sector, which covers everything from estate agents to restaurants and accounts for around 70% of the economy.

However, the production sector, which includes manufacturing and construction, also grew by 0.7 percentage points.

Mr Ramsey added: "As far as economic growth is concerned, the Northern Ireland economy ended 2016 with a bang.

"According to the official NICEI, growth rebounded from quarter three's post-EU referendum dip (down 0.7% quarter-on-quarter) to record growth of 2.1% q/q in the final quarter.  This represented the fastest rate of growth in 12 years."

NISRA also said growth appeared to be gathering momentum. Annualised average growth over the last four quarters was 1.6% - higher than the annual growth over the last two years' period of 1.4%.

However, growth lagged behind the UK as a whole, where there was 1.8% expansion, while the Republic's economy reported a 5.5% rate of expansion.

Danske Bank economist Conor Lambe said the index level was now 105.3, "as high as it has been since the last quarter of 2009".

He added: "Despite this good news, the index remains 5.1% below its highest reading from the second quarter of 2007. With headwinds on the horizon for the local economy, including a squeeze in consumer spending and high levels of uncertainty acting as a drag on business investment, we will likely have to wait a bit longer than we had previously hoped for the Northern Ireland economy to break through that pre-financial crisis barrier."

Belfast Telegraph