Belfast Telegraph

Northern Ireland economic output growth ahead of UK average but at risk of stagnating

Ulster Bank chief economist Richard Ramsey
Ulster Bank chief economist Richard Ramsey
Ryan McAleer

By Ryan McAleer

Economic output in Northern Ireland grew faster than UK GDP last year, new data has from the Government has shown.

The NI Composite Economic Index (NICEI) for the final quarter of 2018 showed that output increased by 1.9% over the year, compared with 1.4% GDP growth across the UK.

Output slowed to 0.2% in the final three months of the year, bringing Northern Ireland back in line with the UK average.

Services remained the strongest performing sector, and the construction and production sectors recorded quarterly declines.

The Northern Ireland Statistics and Research Agency said that when considered over a three-year period, there is evidence that the rate of economic growth here has picked up.

However, the official data lags months behind the latest economic surveys, which have painted an increasingly gloomy picture for the economy in 2019 amid the ongoing uncertainty linked to Brexit.

Ulster Bank chief economist Richard Ramsey (above) said that while the economy notched up its fifth consecutive quarter of growth in late 2018, there appeared to be a clear loss of momentum between the start and end of 2018 that has carried into this year.

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Despite last year's growth exceeding 2017 results, the annual rates were still well below the 2.5% and 2.9% recorded in 2015 and 2016 respectively.

"The Composite Economic Index has reached a decade high, but the local economy still hasn't recovered the full loss of output during the last downturn," Mr Ramsey said.

"The NICEI is still 4.6% below the pre-recession peak of Q2 2007. Similarly, private sector output remains below its high recorded more than 11-and-a-half years ago."

While the private sector hit 10-year highs in the fourth quarter of 2018, the economist described the 0.2% quarterly growth rate as "subdued".

"Northern Ireland's quarterly growth rate halved in Q3 to 0.4% and halved again in Q4 to 0.2%, the latter marking the weakest rate of expansion in the last five quarters of growth," said Mr Ramsey.

"There has been a clear loss of momentum between the first half of 2018 and the second half.

"More concerning has been the continuation of this slowdown in 2019. For example, the Ulster Bank Northern Ireland PMI (Purchasing Managers Index) signalled a stagnation in private sector output in Q1 2019, with March marking the first contraction since July 2016. This year looks set to see an even slower rate of growth than 2018."

Dr Esmond Birnie, senior economist at Ulster University, said that while at face value yesterday's economic data appeared to offer an antidote to recent gloom, he advised caution.

He suggested there may be some issues with the reliability of the data in the NICEI.

Pointing to the recent reports of manufacturing output on the back of firms stockpiling for Brexit, he said the NICEI data reported a fall in production during the fourth quarter of 2018.

Belfast Telegraph