THE north’s economy will still contract in 2023 - but the fall in annual economic output is expected to be smaller, according to Danske Bank's latest quarterly sectoral forecasts for the region.
It is projecting that the Northern Ireland economy will contract by around 0.3 per cent in 2023 as high inflation and changes to the economic policy environment are continuing to impact economic performance.
The forecast represents an upward revision on the bank’s previous expectation of a 1 per cent fall in activity this year. However Danske said the economic outlook remains “highly uncertain”.
Danske is also projecting that the Northern Ireland economy will grow by about 0.9 per cent in 2024.
Its chief economist Conor Lambe said: “The UK and Northern Ireland economies are continuing to face challenges as we move through 2023. High inflation is still squeezing household purchasing power, consumer confidence remains low and the monetary policy environment is considerably tighter.
“But the economy has proved more resilient than previously expected and the labour market remains in a relatively robust position.
“We still expect annual economic output to fall this year in Northern Ireland and the wider UK but we have revised our forecasts upwards relative to our previous report.”
Danske predicts that the wholesale and retail trade sector will experience the deepest contraction in activity of around 1.9 per cent this year but return to growth of about 1.0 per cent in 2024.
Other consumer-focused sectors including accommodation/food services, and arts, entertainment & recreation are also projected to see falls in output in 2023 of around 1.7 per cent.
It predicts that manufacturing output will decline by 1.0 per cent this year but grow by 0.6 per cent in 2024. Output in the construction sector is forecast to fall by about 0.4 per cent this year.
Danske Bank expects the rate of jobs growth will slow sharply this year to just 0.2 per cent and is also forecasting that the north's unemployment rate will average around 3.2 per cent in 2023 before increasing to an annual average of about 3.5 per cent in 2024.