Worst Recession period expected early 2009

By Symon Ross 

Northern Bank economist Angela

Northern Bank chief economist Angela McGowan expects the worst period of the recession in early 2009, but anticipates some improvement in the economy later in the year.

Ms McGowan predicts that the local unemployment rate of 4.3% is likely to rise to more than 5% by mid-2009.

And with UK economic activity expected to contract by up to 2% next year she believes that Northern Ireland will not escape falling into negative territory.

But she adds that “the forecast contraction for the local economy is not quite as bleak mainly due to Northern Ireland's relatively high level of public sector employment and continuing support for the retail sector coming from our euro neighbours”.

The Northern Bank economist also points out that the economic turbulence of the past year has been met with global policy efforts not seen since the 1930s.

“Although the first half of 2009 on first appearance looks gloomy, an improvement in conditions is expected towards the end of next year.

“This will be the result of the accommodative economic policies, which is the combination of cheap money and a massive fiscal stimulus kicking in. This includes the UK's fiscal stimulus of £20bn of government spending and incentives to encourage domestic spending,” she said.

“Northern Ireland policy makers have also taken up the challenge and found ways and means to deliver a stimulus package for the local economy.

“The £1.2bn devoted to public sector construction schemes and the additional £150m for social housing should go some way to reducing the vast numbers of construction workers unemployed in recent months.”

The spending will simultaneously provide the 21st century infrastructure that the local economy requires for the province to compete when the economic shoots of recovery begin to show, said Ms McGowan.

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