Northern Ireland’s economy has emerged from recession, a new report claimed today.
The downturn halted in the last quarter and positive economic growth is set to return by the end of the year, according to a forecast by the Northern Bank.
Among the factors contributing to the recovery is an exchange rate that has seen thousands of cross border shoppers flock northwards from the south.
The report cautioned against over-optimism, however, and warned there was risk of another slight dip in activity in the first three months of 2010.
But across the whole of next year the local economy should grow, albeit by a modest 1.2 per cent.
Northern Bank economist Angela McGowan said: “Our quarterly estimates show that Northern Ireland has pulled out of recession in the second half of 2009.
“The current improvement in the local economy is primarily being driven by a number of factors, including the combination of monetary and fiscal intervention, improved confidence as the global economy recovers, the seasonal impact on household demand as well as a favourable exchange rate.
“It should be noted that while Northern Ireland may have technically come out of recession, overall economic activity levels are still weak.”
Ms McGowan said the sustainability of the recovery will depend upon a number of factors.
“Sustainability of the local recovery will depend upon stability returning to the local labour market,” she explained.
“We expect a peak in unemployment in Northern Ireland in the second quarter of next year - after that, if confidence takes hold, there is a lot of built-up demand that could be unleashed.
“Quite simply, labour market stability allows households to be less cautious with regard to expenditure. Confidence in public finances is also important for investor confidence, so Government plans for fiscal control will play a key role in the recovery process.”
And long term, the economist claimed a recovery is dependent upon Northern Ireland developing a strong export-orientated private sector.
She said: “Having survived the worst of the recession with the support of the public sector, that life line will gradually weaken from 2011 onwards.
“We need to focus on building up the private sector and in particular our export base.”
The report also indicates that the business services sector will be a key growth area for Northern Ireland over the next couple of years.
PA