Brexit fears 'holding back' economy as growth downgraded
Brexit uncertainty is holding back investment in Northern Ireland, Danske Bank has said as it downgraded its economic forecast for this year.
Danske said its prediction for growth in 2019 had gone from 1% to 0.9% - with a steeper downgrade for next year from 1.3% to 1%, as well as a prediction of rising unemployment in 2020.
Brexit and political uncertainty remained the two biggest risks to economic growth here, while the risk of a global slowdown had also mounted. But strong growth is expected in the information and communication sector which is tipped to expand by 3.7%, as well as the scientific and technical services sector at 2.9%.
Overall jobs growth of 1.3% is predicted for this year, slowing to 0.5% next year. Unemployment is to average 3.2% this year but rise to 3.8% next year.
The lender said it expected data would show that the economy here expanded over the second quarter of the year, but that growth over the first half had remained modest.
Danske Bank chief economist Conor Lambe said: "We have revised our forecast for economic growth in Northern Ireland downwards for both 2019 and 2020.
"This largely reflects the modest data for the first half of the year, increased Brexit-related uncertainty and the weaker global economic environment."
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He predicted that consumer spending would keep growing "but the lack of clarity around the UK's future relationship with the EU is expected to continue holding back business investment".
The bank downgraded its expectations for consumer-sensitive sectors including wholesale and retail, which is now expected to grow at 0.9% this year and next.
Accommodation and food services would see slightly more robust growth of 1% this year and 1.2% next year. Construction output was tipped to grow by 1% this year and 0.9% next year.
But manufacturing growth was revised upwards to 1.3% this year, boosted by stockpiling ahead of the original Brexit deadline of March 2019 and continued growth in the second quarter.
However, Danske said it had revised down its prediction for manufacturing in 2020 to 1.4%, reflecting the weaker external environment.
Meanwhile, public administration and defence continues to have the weakest outlook of all economic sectors, with output to shrink 0.7% this year.