NORTHERN Ireland's economy may not be as weak as data seems to suggest, a leading analyst has said.
Richard Ramsey, chief economist with Ulster Bank in the north was speaking after official statistics showed economic output shrank 0.1 per cent between the first and second quarters for the year.
The decrease in the Northern Ireland Composite Economic Index (NICEI) was driven by falls in the production and public sectors.
Mr Ramsey said the figures "suggest that the Northern Ireland economy stagnated in the second quarter with the private sector reporting marginal growth. Meanwhile public sector job losses pushed the overall economy into a slight contraction".
However, he added: " While the local economy faces significant challenges, such as a much weaker recovery than in the UK and the Republic of Ireland, the current position is not as weak as today’s headlines suggest.
"The disappointing private sector growth figures in the second quarter conceal sharp rates of expansion within construction (+3.1 per cent) and reasonable rates of quarterly growth within private sector services (+0.5 per cent)."
He said those factors alongside private sector output growth which was affected by a steep decline in industrual production showed, "the underlying trend for Northern Ireland remains one of economic expansion".
"Indeed, private sector output in Q2 2015 was some 2.1 per cent higher than the corresponding period a year ago," he added.
However, his counterpart at PwC, Dr Esmond Birnie said the NICEI results made "for uncomfortable reading".
"The NICEI suggests that between Q1 2015 and Q2 2015 Northern Ireland's output actually shrank albeit marginally by 0.1 per cent.
“However, this does not infer that eight years on from the banking crisis we are back in recession as previously this NICEI measure has shown a lot of instability on a quarter to quarter basis.
“Nevertheless, this could be another indicator that the Northern Ireland economy is slowing down.
“In fact, the NICEI implies that in the year to Q2 2015 Northern Ireland grew by 1.3 per cent, while the comparable UK GDP figure is 2.7 per cent."
Meanwhile, business advisory firm Deloitte has produced a report which suggests political instability at Stormong could hamper "Northern Ireland’s extraordinary economic potential".
The UK-wide report – The State of the State 2015 – was produced with think tank Reform.
Among its findings were that boosting productivity and freeing up just one hour of public sector workers’ time each year could deliver £2.9m of savings in Northern Ireland.
Jackie Henry, Deloitte’s senior partner in the north said: “The last financial year has seen a record £1.4 billion of investment in Northern Ireland. A young educated workforce, strong infrastructure and relatively low costs all make Northern Ireland a compelling prospect for global companies, however delivering continuous improvement will require investment in people and a different approach to managing talent. The major challenge for this region is to secure political stability as this will provide the strongest basis for growth over the next decade.”
