Business

Northern Ireland economy enjoys fifth successive quarter of growth and hits 10-year high

Northern Ireland's economy had its fifth successive quarter of growth in the October-December period, nudging up 0.2 per cent
Gary McDonald Business Editor

THE north's economy enjoyed its fifth successive quarter of growth in the October-December period, nudging up 0.2 per cent (the same rate as the UK as a whole) and reaching a ten-year high.

And it means output for the whole of the year, at 1.9 per cent, was better than the UK (1.4 per cent) and twice what it was in 2017.

Yet the data contained in the latest NI Composite Economic Index has been described by one leading commentator as "like driving a car with the windows blocked up".

While the index reached a decade high in 2018, the local economy still hasn’t recovered the full loss of output during the last downturn, and it it still 4.6 per cent below the pre-recession peak of 2007.

Dr Esmond Birnie, senior economist at Ulster University, said: “Taken at face value, this data might seem an antidote to some of the economic gloom which is now common, but some caution is in order.

"A wry commentator once said the managing of economies was rather like trying to drive a car when the front view window was blocked (the future is unknowable) and the rear view window was broken (we cannot be sure of even what has happened in the immediate past given statistical unreliability).It does feel like that sometimes regarding the Northern Ireland economy."

He added: "The NICEI data is suggesting the Northern Ireland economy has been accelerating rather than decelerating, though before we celebrate, there are some qualifications.

"Frstly, in seven of the last 24 quarters the index has implied that our economy contracted, but in each of the last six years the UK economy grew in every quarter. Either, the Northern Ireland economy is a lot more volatile than the overall UK economy or there may be issues about the data reliability in the NICEI.

"Secondly, could stock-building ahead of Brexit have led to spurious output growth? That could explain relatively high growth in 2018. Also, growth in the last the quarter was concentrated in services (0.5 per cent) and not in the production sector (where stocks could be built up), where output fell by 0.1 per cent.

"And compared to the pre-banking crisis peak level of output in 2007-8, if the NICEI data is right the current level of output in NI is still 4.6 per cent down on where it was a decade ago whereas the UK economy has managed to produce 12.1 per cent growth.”

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