Belfast Telegraph

Six economists give their predictions for 2019

Neil Gibson
Neil Gibson
Andrew Webb
Conor Lambe
Dr Esmond Birnie
Paul MacFlynn
Seamus Leheny

Neil Gibson, Chief economist, EY Ireland: Normally I try to be positive when looking ahead - history tells us that the ingenuity of firms and adaptability of the economy usually sees us through even the toughest of times.

However, I have to be honest and say that I am more worried about the economic outlook for the year ahead than at any time since the last recession.

There are many global warning signs flashing and the consumer spending slowdown, that I have feared for 18 months, is detectable in a number of data indicators if you look carefully. Brexit remains a huge concern, though much of my nervousness for the UK and Northern Ireland stems from weaknesses firmly in place long before the EU referendum took place. Locally, I expect the labour market to begin to retract in 2019 but I have been pleasantly surprised that this has not already occurred.

There will still be pockets of growth based on Northern Ireland's key strengths of talent, cost base and quality of life and hopefully my worries will prove wide of the mark.

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Conor Lambe
 

Conor Lambe, Danske Bank chief economist

It's impossible to give any predictions for next year without first giving some thoughts on Brexit.

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The last couple of weeks have shown just how volatile the Brexit process is at present and there are a number of potential outcomes that could come to fruition at the end of March 2019.

Personally, I think a no-deal Brexit will be avoided. However, it is still a possibility.

Therefore, businesses in Northern Ireland and across the UK need to make sure they are prepared for it, in case we do find ourselves in that position next March.

Assuming a no-deal Brexit is avoided, I expect the Northern Ireland economy to grow at a similar rate to this year in 2019. I think inflation will continue moving gradually back towards the Bank of England's 2% target and I expect there to be one interest rate rise next year.

I'm also hopeful that 2019 will be another good year for local tourism.

Turning from predictions to asks, there are two things at the top of my economic wish list for 2019 - the return of the Executive and avoiding a no-deal Brexit.

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Dr Esmond Birnie
 

Dr Esmond Birnie, Senior economist, UU Economic Policy Centre

Predictions can be a mug's game. Things turned out better than I expected in the Korean peninsula in 2018.

There are plenty of geopolitical wildcards for the coming year: the China-US trade war and the Russia-Ukraine semi-hot war.

There may be marked instability in Saudi Arabia at some point in the next decade, though what that will mean for global oil prices and decarbonisation remains unclear.

And it probably won't happen next year.

During 2019 half the world's population will be online.

Next year the Indian statistical authorities will be able to announce that the Indian economy overtook the British economy in terms of its size as measured by GDP at the exchange rate in 2018.

Both these outcomes reflect very long run trends.

January will see the 20th anniversary of the euro single currency. Its survival has surprised me but it is still more of a grand political project than what economists call an optimal currency area.

Sadly, restoration of devolution here is very unlikely in 2019.

A catastrophic recession, deeper than the 1920s and 1930s, of the type the Bank of England and Treasury have been warning us about, is still unlikely, even in a no-deal Brexit.

That said, the history of Anglo-Irish relations contains episodes of self-destructive irrationality originating from either London or Dublin - or sometimes both!

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Paul MacFlynn
 

Seamus Leheny, Policy manager for NI, Freight Transport Assoc

Brexit will undoubtedly be the major influencing factor for the logistics and freight industry in 2019. This is simply down to the reason that any sudden changes to market conditions such as leaving the EU without a deal will overnight undermine supply chains that are incredibly sensitive to tariffs, regulatory controls and routes.

A no-deal would unhinge the UK economy but we in Northern Ireland would suffer the brunt of this due to our reliance on intermediate goods from the Republic.

Away from Brexit, hopefully we will see some good news for Northern Ireland with work finally commencing around late Summer on the A5 road between Newbuildings and Strabane, while on the A6 we will see the new dual carriageway section between Randalstown and Toomebridge finally open to motorists around mid-2019.

Following a legal setback to the York Street Interchange earlier this year, I envisage this should be rectified with a successful contractor being appointed. The big concern is will we still have the project funding secured via the confidence and supply agreement?

The momentum to new sustainable technology in transport will continue here and we should see plans for the introduction of alternative means to deliver goods in Belfast. With air quality in urban centres under growing scrutiny we may see local authorities discuss the potential for clean air zones similar to what is happening in Britain.

Online shopping will continue to grow with retailers offering even faster delivery times, meaning logistics companies having to further improve their inventory and delivery systems.

Finally, 2019 will see continued development of autonomous vehicles including platooning and semi-autonomous vehicles reaching trial stages on roads in the UK and across Europe. Just don't expect to see this happening here, though, as we will need an Assembly to authorise such trials and implementation.

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Paul MacFlynn
 

Paul MacFlynn, Nevin Economic Research Institute (Neri)

The UK economy does not look as though it will start 2019 from a position of strength.

The latest indications we have are that economic growth slowed considerably in October, and unless the retail sector has a very good Christmas it is possible that growth in 2018 will undershoot that of 2017.

There are also indications that activity is slowing in the US as the sugar rush from Donald Trump's tax cuts begins to fade.

China and the Eurozone do not appear to be firing on all cylinders either, which means that the UK will be tackling its own unique challenges next year in a deteriorating global economic climate.

The UK recovery that began after the financial crash took much longer to take root in Northern Ireland. We struggled more than most regions of the UK and it wasn't until 2014 that we began to see good rates of growth.

Whatever your opinion about Brexit, something hit the economy in 2016 and we were knocked off our growth trajectory from 2017 onward. All this means that if a global slowdown is coming, Northern Ireland has had much less time to recover from the last recession and is also uniquely vulnerable to whatever Brexit ends up being.

Firm predictions these days are a fool's errand, but the omens are certainly not good.

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Andrew Webb
 

Andrew Webb, Director of Baker Tilly Mooney Moore

The year just gone has confounded and surprised in equal measure. Globally, President Trump dominated, lurching between trade wars, tax cuts and an array of bemusing diplomatic events.

Closer to home, the process of leaving the EU left room for little else in its wake. Through it all, the economy kept ticking along, and locally employment levels reached record levels.

That prolonged period of job growth is finally starting to translate into increases in wages. That has been a welcome development as 2018 has been a particularly difficult year for retail across the UK as consumers ran out of steam.

As we enter 2019 the most appropriate word to describe the economic mood is 'jittery'.

The US could reach its longest ever growth streak by mid-2019 but all good things must come to an end and there is a growing consensus building around a US recession by year end. That has implications for our own economy.

As I write this, no one has a clue what way Brexit is heading so early 2019 could bring a no-deal Brexit, which would devastate trade. Equally it could bring a withdrawal agreement and transition to a new relationship with the EU.

2019 is a big year for democracy.

A third of the world's population are heading to the polls (not counting the potential for a UK general election!), including local government elections here.

That scale of potential global political change could have a big impact on global economic performance - investment plans may be put on hold until outcomes are known.

Here, the local elections probably lengthen the odds of getting the Executive back in the first half of the year.

The continued lack of an Executive, local council elections and Brexit suggest we have our own jitters to contend with.

With the economic headwinds we face, I'd be pleasantly astounded if we end 2019 without a downturn in employment.

Belfast Telegraph

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