Growth forecast for the Northern Ireland economy downgraded largely due to the impact of higher inflation
The Northern Ireland economy grew in the final quarter of 2021 and is estimated to have expanded again in the first quarter of 2022. However looking forward, the outlook for the economy is particularly uncertain as the war in Ukraine, high inflation, changes to the economic policy environment and Covid-19 all have the potential to impact economic performance. We expect the pace of economic growth to weaken as high inflation squeezes consumer incomes and both fiscal and monetary policy are becoming less accommodative. As such, we have downgraded our forecasts and now expect the Northern Ireland economy to grow by around 3.6% in 2022 and about 1.7% in 2023.
The Northern Ireland labour market continues to perform well with a number of indicators signalling rising employment levels. Data from the Quarterly Employment Survey showed a 0.4% quarterly rise in the number of employee jobs in Northern Ireland in 2021 Q4. This lifted the total number of employee jobs above its pre-pandemic level and to a new series high. Given the recent strength of the labour market, we are forecasting that the annual average number of employee jobs in Northern Ireland will increase by around 1.1% in 2022, followed by a further rise of 0.6% in 2023. We also expect the unemployment rate to average about 3.2% in 2022 and 3.4% in 2023.
