Northern Ireland economy will return to pre-pandemic levels in second half of next year, Danske Bank report forecasts
The economy will return to pre-pandemic levels in the second half of next year, Danske Bank has forecast.
A report by the bank predicted that the vaccine scheme would provide an economic boost from the second quarter of this year, with the sectors hardest hit by the pandemic expected to see the most rapid recovery.
The study forecast economic growth of 4.8% across 2021, accelerating to 5.8% in 2022.
Recovery of the jobs market will be fragile, with a fall in employee roles of 1.9%.
Danske Bank said the economy was likely to have shrunk in the first few months of the year.
Chief economist Conor Lambe added: "Strict coronavirus restrictions have been in place in Northern Ireland since the end of 2020. As such, we believe that the economy will have contracted in the first quarter of the year.
"However, coronavirus case numbers have reduced significantly and the vaccine programme has progressed well.
"While we expect the unwinding of the current restrictions to proceed cautiously, we think that the gradual reopening of the economy will see economic output begin to grow again from the second quarter onwards."
Measures such as the furlough scheme will continue to play an important part in the recovery, the study predicted.
But some deterioration is expected in the labour market, with consumers also likely to remain cautious about spending.
The food and accommodation sectors are expected to see growth of 18% over the year.
The wholesale and retail trades were tipped for 4.4% rises in output growth, with manufacturing and construction expected to grow by 5.7% and 6.7% respectively.
Measures in last month’s Budget allowing companies to cut their tax bill by up to 25p for every £1 they put back into their business are likely to encourage investment, the report said.
Danske Bank predicted that sectors in which people have been able to work remotely, such as IT and professional services, would grow by 4.6%.
It was not all good news, however, with the bank expecting the arts, entertainment, accommodation and food sectors to see falls in employment of 6.5% and 6.2% respectively. It predicted an overall 1.9% decrease in employee jobs this year.
Mr Lambe said: "The pandemic remains the most significant risk facing the economy.
"Considerable uncertainty still exists around how the reopening of the economy will impact on case numbers and the pace at which restrictions can be eased.
"The emergence of new variants of the virus is a significant risk and could impact the unwinding of the restrictions or potentially lead to restrictions needing to be reintroduced.
"In addition, high uncertainty related to the pandemic may lead to weaker consumer and business confidence and more precautionary spending and investment habits."