Northern Ireland political uncertainty will stall economic growth at 1% in 2019, warns Danske
Northern Ireland's economy will expand by just 1% during 2019 as Brexit and the lack of an Executive continue to drag on performance, according to a survey today.
In its quarterly report, Danske Bank said it had downgraded an earlier forecast of 1.2% growth for the province during 2019.
But in 2020, the bank's chief economist forecasts expansion of 1.3% - though both this year and next our economy will lag UK growth of 1.2% and 1.5% respectively.
And job creation would also slow, but some sectors would expand overall with the strongest output growth for 2019 in the fields of administration and support at 3.8%, and information and communication at 3.5%.
It predicts output growth in the key manufacturing sector of just 0.9% this year - but if a Brexit deal is reached, that could rise to 1.4% next year. Chief economist Conor Lambe (below) said Brexit was still dragging on economic growth in Northern Ireland, even though a no-deal departure had become a less likely outcome.
"Given that Parliament does not support a no-deal Brexit, the UK leaving the European Union without a deal is an unlikely outcome," he said.
"However, it is still a possibility and, if it were to occur, it would have severe consequences for both the UK and Northern Ireland economies."
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And while the bank believes that the UK will ultimately leave with a deal, he admitted future events were hard to predict.
"With high levels of uncertainty continuing to linger, Brexit remains a drag on economic growth and it poses a significant risk to Northern Ireland's future economic prospects," he said.
The economist explained the lack of a devolved government has also hit investment decisions and confidence. But he said with inflation remaining at 1.9%, and wage growth continuing, household spending power was likely to continue its recovery in 2019.
"However, Brexit-related uncertainty looks set to constrain business investment and weaker global growth is expected to lead to some challenges for exporting businesses," he added.
The bank predicted output growth in the wholesale and retail trade sector of 1.1% in 2019 and 1.5% in 2020. And construction is tipped to grow 1.2% this year and 1.5% next year, though political uncertainty is expected to drag on capital spending which could hinder growth.
Public administration and defence has the weakest outlook, with output expected to shrink by 1% this year and again by 0.8% next year.
While the last quarterly employment survey had shown year-on-year growth for jobs since the end of 2018 of 1.9%, Danske predicted jobs growth would slow to 0.5% in the year as a whole and to 0.3% in 2020.