Growth forecast lowered for this year but the economic recovery in Northern Ireland is expected to continue
The Northern Ireland economy grew strongly in the second quarter of the year as many of the coronavirus restrictions were gradually eased. The economy is also likely to have expanded in the third quarter though probably at a slower rate as the large gains from the initial reopening have now passed and businesses have begun to encounter disruption within their supply chains. Consumers appear to have reacted positively to the increased opportunities to spend on both goods and services and while we still expect consumer spending to be a key driver of future growth, some cautious spending behaviours are likely to persist. Given the latest data and some of the challenges that have emerged over recent months we have revised our forecast for economic growth in Northern Ireland downwards to 5.8% in 2021, which would still represent a strong rate of expansion. For 2022, we have slightly increased our growth projection to 4.7%.
The latest data from the Quarterly Employment Survey showed positive employment growth continuing into the second quarter of the year, as demand in the labour market firmed in line with the easing of restrictions. The number of employee jobs in Northern Ireland rose by 0.2% over the quarter to June 2021. However, we do expect to see some job losses as government support unwinds. Overall, we are forecasting that the average annual number of employee jobs in Northern Ireland will decline by 0.6% in 2021, before returning to growth of around 1.0% in 2022. We also expect the unemployment rate to average 4.1% in 2021 and 4.4% in 2022.