NI economy expected to contract by 11% in 2020 then grow by 7% in 2021
The Northern Ireland economy is expected to experience a significant contraction in 2020 due to the coronavirus pandemic. The latest data shows that economic output fell in the first quarter of the year, but the fall in the second quarter is likely to be substantially larger due to the imposition of the lockdown restrictions and the temporary closure of many businesses.
Given the ongoing easing of the restrictions, the economy should return to growth in 2020 Q3 but the recovery is expected to be a gradual one. Overall, we are forecasting that the Northern Ireland economy will contract by around 11% in 2020 followed by growth of about 7% in 2021.
Government policy measures have helped to limit the immediate impact of the pandemic on employment levels, but we think the labour market will weaken further over the rest of the year.
We expect the number of employee jobs to fall by around 2.8% in 2020 and the annual average unemployment rate to increase to 5.5%. However, we do expect to see some recovery in the labour market in 2021 with the number of jobs rising by 0.4% and the annual unemployment rate coming down slightly to 5.3%.