The North will avoid recession next year thanks in part to continued strong consumer sentiment and a likely boost from additional tourism and retail spending driven by the depreciation in sterling, according to the Ulster University.
However, Prof Neil Gibson, director of the the university’s economic policy centre, also warned that while there is evidence of a “high degree of economic resilience” in the North it will not be immune to the “uncharted waters that lie ahead”.
Delivering his Winter 2016 economic commentary and outlook in Belfast on Thursday, Prof Gibson highlighted how Northern Ireland beat expectations for 2016 – with jobs growth of 3.3 per cent in the 12 months to September 2016, well ahead of the UK average of just 1.3 per cent – but he also warned that consumers, businesses and policymakers in the future will undoubtedly face challenges associated with a high level of uncertainty.
Prof Gibson said the Brexit referendum and US election results had dominated economic debate in recent months.
The winter outlook suggests that while tariffs and trade feature highly from an overall UK perspective, issues such as dealing with the Border and migration policy “are arguably more important” in the North and businesses there need clarity on these to plan effectively.
Competitiveness
Prof Gibson said Northern Ireland's political leaders also needed to get to work on the long-term policy objective of improving the North's global competitiveness against this scenario.
“It is important that the Executive remains focused on addressing the long-standing economic challenges of Northern Ireland. Non-student inactivity rates, low productivity and the high numbers of school leavers with low or no qualifications have persisted for many years. As a result, the key outcomes in the programme for government remain a priority inside or outside the EU,” he said.
The economic policy centre said it employed a much wider range of economic scenarios than usual to analyse the potential economic outcomes for 2017 and beyond before compiling its Winter 2016 commentary.
This, according to Prof Gibson, was because there is currently “very limited evidence on which to base assumptions for economic forecasting” which delivers both optimistic and pessimistic possibilities; one of the centre’s projections assumes that there could be substantial reductions in both business investment and foreign direct investment by 2019.
“Growth should pick up towards the end of the decade as greater certainty emerges,”he said. “However, the difference between our most optimistic and pessimistic scenarios is stark, the jobs growth forecast ranges from a loss of 4,500 over the next decade to an increase of almost 90,000, such is the level of uncertainty.”
