Economic growth forecast to slow as high inflation, tighter policy and uncertainty weigh on the NI economy
The Northern Ireland economy is estimated to have grown again in the first quarter of 2022 but the pace of economic growth is likely to slow from the second quarter of the year onwards. Inflation is at a multi-decade high as the war in Ukraine and global supply chain issues are contributing to higher prices and consumer spending is becoming increasingly squeezed. The economic policy environment is also less supportive of growth and uncertainty levels are particularly elevated. We continue to expect the Northern Ireland economy to grow by around 3.6% in 2022, but have downgraded our forecast for 2023 and now expect economic output to expand by about 1.0% next year.
Northern Ireland’s labour market continues to perform strongly across a range of key metrics. The latest data from the Quarterly Employment Survey showed a 0.4% rise in the number of employee jobs in 2021 Q4. This growth brought the number of jobs to a new series high. The unemployment rate also fell over the January – March 2022 period to 2.3%, the joint lowest on record and similar to the level recorded immediately prior to the onset of the pandemic. This robust performance underpins our view that the annual average number of employee jobs will increase by around 1.2% in 2022, followed by a further increase of about 0.6% in 2023. We are also forecasting that the unemployment rate in Northern Ireland will average around 2.7% in 2022 and 3.3% in 2023.