The Northern Ireland economy is on course to outperform the wider UK and grow by 1.4% this year, a new forecast from Ulster University suggests.
The institution’s Belfast-based Economic Policy Centre (EPC) said the north’s economy has been stronger than expected in 2024.
In its latest economic outlook, Ulster University’s EPC forecasts growth of 1.4% this year, rising to 1.7% in 2025, driven by strong growth in employment particularly in the transport, construction and health sectors.
The north’s unemployment rate fell to a record low of 2% between March and May this year.
Official data released at the end of June showed the north’s economy grew by 1.4% in the first quarter of 2024.
An economic forecast published by PwC last week said the north will experience 1.2% growth in real GDP (gross domestic product) this year.
According to PwC, it will make Northern Ireland the fastest growing UK region outside London this year.
Both Ulster University and PwC believe the north is on course to outperform the wider UK economy as a whole in 2024.
Economists at the university said easing inflationary pressures and anticipated interest rate reductions by the Bank of England, alongside continued real wage growth, will boost economic growth in the near term.
But UUEPC expect the UK economy to outpace the north next year and into 2025.
They said that modest productivity growth will hold back longer-term economic prospects.
The north’s long-standing issue with productivity has been identified as a priority for both the new Stormont executive and the new UK Government.
“Several factors have allowed Northern Ireland to perform relatively well this year,” Dr Myles Patton, principal economist at the policy centre.
“Looking ahead, however, our tight labour market, ongoing economic inactivity and modest productivity levels will limit our future economic success.
“A broad range of policy interventions are required to create the conditions for sustained economic growth going forward.”
Ulster University’s report expects the Bank of England will cut interest rates to 4.75% by the end of the year, falling to 4% in 2025.
The north’s labour market is also expected to remain tight, with unemployment remaining close to 2%.
Dr Patton said research carried out by Ulster University found that of the 320,000 economically inactive people in the north, 16% said they would like to work, but face a range of barriers preventing them from returning to the labour market.
He said the group of ‘hidden unemployed’, represents the largest pool of untapped labour in the northern economy, accounting for approximately 51,000 people.
“If their participation in the labour market is not facilitated, local firms will continue to experience labour market shortages that will ultimately hold back growth and waste the potential of our people,” he said.
“Northern Ireland’s future success is dependent on promoting inclusive growth, ensuring access to good jobs and opportunity for all groups across the region.”
