No-deal Brexit a risk to north's economic growth in 2019, says report
THE Northern Ireland economy is set to experience a slight-pick up in 2019, but future growth could be threatened by a no-deal Brexit, according to a new report.
Danske Bank's latest quarterly forecast has revealed an upward revision for the economy, which is now expected to have grown by 1.1 per cent last year and increase to 1.2 per cent in 2019.
The bank's previous forecasts set the rates at 1 per cent and 1.1 per cent respectively.
Danske Bank described 2018 as a year of "modest growth", with marginal improvement expected this year in the
face of ongoing uncertainty around Brexit, pressure on household budgets and the lack of a local devolved government.
Danske Bank chief economist, Conor Lambe said the upward revision for economic growth is driven by the recovery of the production sector in the third quarter of 2018, but warned it hinges on a Brexit deal being agreed before the March deadline.
"Despite being less than three months away from the date upon which the UK is scheduled to leave the EU, there is still a large degree of uncertainty regarding the final Brexit outcome," Mr Lambe said
“A range of potential Brexit scenarios remains possible, one of which is a no-deal Brexit. While considered an unlikely outcome, a no-deal Brexit, and the disruption that it would result in, is undoubtedly the biggest risk facing the UK and Northern Ireland economies at present.”
The services sectors is set to underpin growth over the next year, with administrative and support services, professional, scientific and technical services and information and communication leading the way, according to the report.
The bank is also forecasting improvements within the wholesale and retail trade, manufacturing and construction sectors.
Within manufacturing the growth forecast has been revised upwards to 1.1 per cent in 2018 and is expected to grow by 1.2 per cent this year, while Danske Bank said it expects growth in the construction sector to reach 1.3 per cent in 2018 and expand to 1.4 per cent in 2019.
Public administration and defence continues to have the weakest outlook of all the sectors of the Northern Ireland economy. Output is expected to contract by 0.8 per cent in 2018, and by a further 0.9 per cent in 2019.
In relation to the labour market the report states that employment growth will reach 1.9 per cent for the whole of 2018, however this is expected to slow significantly to 0.5 per cent this year due to a lack of spare capacity in the market and a renewed focus on increasing productivity.
The bank is also forecasting that the unemployment rate will rise from the average 3.8 per cent in 2018 to 4.1 per cent this year.