NI economy will grow this quarter, but full recovery will take over a year

  • Northern Ireland expects growth in second quarter of 2021 as the pandemic gets under control, but things won't be back to normal until the second half of 2022.

    Danske Bank's latest economic projections for Northern Ireland have been released, and it's looking good for the second quarter of 2021. The first quarter showed an expected contraction of the economy due to coronavirus lockdowns becoming very strict after Christmas, but the second quarter will see some growth.

    The new Northern Ireland Quarterly Sectoral Forecasts report predicts that the NI economy will grow by a total of 4.8% this year and 5.8% in 2022 following a significant 11% drop in 2020. Total economic activity isn't expected to return to pre-pandemic levels until the second half of 2022.

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    Danske Bank Chief Economist, Conor Lambe, commented: "Coronavirus case numbers have reduced significantly and the rollout of the vaccine programme has progressed well. While we expect the unwinding of the current restrictions to proceed cautiously, we think that the gradual reopening of the economy will see economic output begin to grow again from the second quarter of 2021 onwards."

    The fastest growth this year has been in sectors that were virtually shut down by the lockdowns, such as the accomodation and food services, and the entertainment and recreation industry. Their recovery is proceeding at pace as restrictions are eased as the vaccine rollout continues.

    The report suggests we'll see a rise of around 4.4% in the wholesale & retail trade sector this year as restrictions continue to be eased, manufacturing will grow by around 5.7%, and the construction sector will grow by 6.7% by the end of this year. These industries haven't been as badly hit by lockdowns as they have been able to continue operating in some capacity.

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    The tech sector, including IT and R&D firms, have been better able than most to adapt to remote working, and are expected to grow by 4.6% this year. The report warns that the job market could be sharply hit when the Furlough scheme ends in September of this year. The average number of employee jobs in NI is expected to drop by 1.9% by the end of the year, and only recover by 1% next year.

    While Covid-19 is being tackled with a widespread vaccination rollout, Conor Lambe noted that there's still considerable risk to the economy from the emergence of new variants. Any new variants that change current vaccination effort effectiveness could lead to restrictions not being lifted as quickly as expected and will affect business confidence.

    Source: Written based on press release

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    Brendan is a Sync NI writer with a special interest in the gaming sector, programming, emerging technology, and physics. To connect with Brendan, feel free to send him an email or follow him on Twitter.

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