Economic growth in Northern Ireland to remain relatively modest this year but forecast revised slightly upwards
The UK economy returned to growth in the first quarter of 2024 and we think that output in Northern Ireland is also likely to have increased at the start of this year. Looking forward, we expect lower inflation to support a gradual easing of the pressure on consumer spending power and monetary policy to begin to loosen this year. However, even if Bank Rate does start to decline, the overall monetary policy stance is likely to remain relatively tight and the outlook for investment is still subdued. We are forecasting that the Northern Ireland economy will grow by around 0.5% this year, a slight upward revision from our last report but still relatively modest. We then expect the pace of annual growth to pick up with economic output projected to rise by about 1.2% in 2025.
The Northern Ireland labour market is still in a relatively robust position. The unemployment rate fell to 2.1% and the employment rate increased to 71.8% in the January – March 2024 period. However, there are also some signs that the labour market could be softening somewhat. The number of employee jobs declined in the final quarter of last year and the more timely HMRC Pay As You Earn data showed a monthly fall in the number of payrolled employees in April. Given these initial indications of softening, the modest outlook for economic growth in 2024 and recognising that employment trends tend to lag wider economic developments, we are projecting that the growth rate of the annual average number of employee jobs will slow to around 0.4% this year before increasing to about 0.8% in 2025.
Read the 2024 Q2 Quarterly Sectoral Forecasts report here
