Page last updated at 06:40 GMT, Monday, 7 December 2009

'Recession over in Northern Ireland' says bank

The Northern Bank predicts modest growth for the NI economy next year
The Northern Bank predicts modest growth for the NI economy next year

The recession is over in Northern Ireland according to the chief economist working for one of NI's 'big four' banks.

Angela McGowan from the Northern Bank said the local economy "pulled out of recession in the second half of 2009".

She added that economic growth was set to return before the end of the year but cautioned that "overall economic activity levels are still weak".

Ms McGowan made the comments as the bank published its quarterly forecast.

'Improved confidence'

The report said that the local economy "stopped contracting in the third quarter of 2009" and forecast marginal growth of 0.9% between October and December.

The bank predicted that the "majority of sectors in Northern Ireland should return to positive growth in the last quarter of this year", with the retail and hospitality sectors benefiting from increased consumer spending during the Christmas period.

However, it also reported that sectors related to the property market, such as construction, building products and conveyancing, have still not returned to growth.

Angela McGowan
Angela McGowan is the Northern Bank's chief economist

The bank's chief economist said the current improvement in the local economy was driven by a number of factors including government fiscal intervention, improved confidence in global economic recovery and a "favourable exchange rate".

But she said the employment market was the key to sustaining Northern Ireland's economic recovery, however modest it may be.

Ms McGowan explained that she expected local unemployment levels to peak some time between April and June next year.

'Less cautious'

After that, if people begin to feel that their jobs are more secure, a lot of "built-up demand" could be "unleashed" in respect of consumer demand for goods and services.

"Quite simply, labour market stability allows households to be less cautious with regard to expenditure.

"Confidence in public finances is also important for investor confidence, so government plans for fiscal control will play a key role in the recovery process," she said.

Her assessment is broadly in line with that from the Ulster Bank which predicted last week that Northern Ireland would emerge from recession by the end of this year.

In the Ulster Bank's quarterly economic review, Richard Ramsey said the local economy would take several years to rise back to the levels before the downturn and would be doing well to get back to peak employment levels by 2015.

Long-term prospects

Looking at 2010 as a whole, the bank said there was a risk of a "slight dip in economic activity in the first quarter" but forecast a "modest 1.2%" growth across the year, an upward revision since its last quarterly report.

As for Northern Ireland's long-term economic prospects, Ms McGowan said she believed that would be "dependent upon Northern Ireland developing a strong, export-orientated private sector".

"Having survived the worst of the recession with the support of the public sector, that lifeline will gradually weaken from 2011 onwards."

The UK economy as a whole is currently in the grip of the longest recession since records began in the 1950s.

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