Economic recovery underway but rising Covid-19 cases and Brexit pose risks to the NI economy
The Northern Ireland economy experienced a sharp contraction in the first half of 2020 due to the coronavirus pandemic. A gradual return of economic activity now looks to be underway but the recent rise in the number of Covid-19 cases and the need for new restrictions demonstrates the fragility of the recovery. Plus with the end of the Brexit transition period also rapidly approaching, there is a great deal of uncertainty and risk to the outlook. We are continuing to forecast that the Northern Ireland economy will contract by around 11% in 2020 and then grow by about 7% in 2021.
Government policy measures have helped to limit the impact of the pandemic on employment levels to date but we expect the labour market to weaken over the rest of this year and into 2021. We are projecting that the average number of employee jobs will fall by around 1.3% in 2020 with a further decline of 2.8% in 2021, and that the annual average unemployment rate will increase to 4.3% in 2020 and rise further to 6.5% in 2021.