Cause for optimism as north's economy enjoys rebound
THE north's economy enjoyed a striking rebound in the second quarter of this year, with increased sales, plans for investment and strongly improving business confidence across the manufacturing and services sectors.
But there is also a massive shock ahead in terms of pricing, with the cost raw materials sky-rocketing, and this will inevitably be passed on to customers.
The latest quarterly economic survey (QES) from the Northern Ireland Chamber of Commerce and BDO shows most regional forward-looking indicators suggesting an economic rebound.
But the improvements are coming from an historic low, and the report cautions that it could be well into next year before trading is back to pre-pandemic levels.
It also warns of the collateral damage to the economy because the current political environment is having a negative impact on Northern Ireland's international reputation as a place to visit and do business with.
More businesses are now making plans to invest, particularly manufacturers, while recruitment activity continues to improve, the QES said.
Nearly a third of Chamber members (29 per cent) said their business had adapted well to new trading arrangements (up from 15 per cent in the previous quarter).
Two in three respondents also believe the north’s unique status post EU Exit presents opportunities.
Chamber chief executive Ann McGregor said: “Economic recovery is definitely gaining momentum, but we must be mindful that it is coming from a very low base.
“Businesses are also facing significant pressure to raise prices for a variety of reasons including raw material cost increases, bottlenecks in supply chains caused by Covid, as well as cost and administrative burdens arising from new trading arrangements.
“There is a danger of persistent inflation, which is bad for businesses and consumers. But we hope these price pressures will be a largely temporary phenomenon as some sense of normality returns after the extreme challenges of the last year and a half.”
Brian Murphy, managing partner at BDO NI, added: “What we have experienced over the last year has not been a ‘market failure’, but has been driven by a most dreadful pandemic, and as the restrictions have eased the economy has been able to restart and put us a better footing than before.
“With the building of levels of confidence and optimism evidence in this quarter’s results, we must communicate to the wider world what has been achieved here and why international businesses should invest in Northern Ireland, because we have an amazing product to offer the world.”