Northern Ireland economy to shrink in 2020 but gradual recovery to begin by the end of the year
Northern Ireland is expected to experience a staggering decline in economic growth in 2020 due to the impact of the coronavirus pandemic. Consumer spending is set to slump as restrictions on people’s movement lead to lower discretionary spending and business investment is expected to fall as many firms will face cash flow and revenue challenges.
We expect the shock to the economy to be concentrated in the first half of 2020 and that activity will begin to recover gradually in the second half of this year and into 2021, with government policy measures supporting the recovery. We are forecasting that the Northern Ireland economy will contract by around 7.5% in 2020 and then grow by about 5.0% in 2021.
We believe that policy measures will help to minimise the number of job losses as a result of the pandemic. However, employment is still expected to fall this year. We expect the number of employee jobs to fall by around 2.3% in 2020, but we do expect to see some recovery in the labour market in 2021 with the number of jobs rising by approximately 1.2%.