Posted on Tuesday 9 October 2018 by Ulster Business
Brexit-related uncertainty and high inflation are expected to contribute to a slowdown in economic growth here, writes Margaret Canning.
Danske Bank's latest sectoral forecasts predict growth of 1% this year and 1.1% next year.
It predicted a slow down in growth despite a pick-up in the pace of business activity during the second quarter.
Conor Lambe, Danske Bank chief economist, said growth had picked up in the second quarter as temporary adverse factors - such as bad weather - which had hit the first quarter came to an end.
"However, with above-target inflation exerting pressure on consumers' purchasing power, and Brexit-related uncertainty weighing on business investment, we expect overall growth in 2018 to remain relatively subdued at 1%, with only a marginal increase to 1.1% next year."
As business advisory firm Grant Thornton announced 48 new jobs, Danske said the business services sectors were to underpin economic growth in the next two years, with strong growth for the administration and support sector at 3.5% this year.
It predicted that the information and communication sector would enjoy expansion of 3.3% this year and 2.9% next year.
However, construction is tipped for more limited growth at just 1% this year and next.
But while manufacturing was predicted to grow at just 0.7% this year, its rate of growth would double in 2019.
But the weakest of all is predicted to be public administration and defence, where output is tipped to shrink by around 1% this year and in 2019.
Mr Lambe said that the prospect of a no-deal Brexit was the biggest risk facing the economy.
"It is now just under six months until Brexit formally takes place. However, the UK and EU have still not reached a withdrawal agreement that would see the UK leave the European Union in a managed and orderly way," he said.
"We continue to believe that the UK and EU will eventually reach an agreement.
"However, at this stage it is unfortunately not yet possible to rule out a no-deal Brexit taking place in March 2019.
"A no-deal Brexit would undoubtedly lead to negative economic consequences for both Northern Ireland and the wider UK and, as such, it is the most significant risk facing the economy at this time."
And despite the risks posed by Brexit, Danske Bank expects to see continuing growth in the labour market, predicting that employee jobs will grow by 1.8% this year and 0.5% next year.
Production jobs in fields like manufacturing and water supply would provide the biggest number of new jobs, accounting for combined growth of just over 10%.
And despite well-documented troubles for retail, Danske Bank predicts jobs growth in the sector of 1.3% this year and 0.5% in 2019.
It also predicts only slight change in the unemployment rate at 3.9% this year and 4.2% in 2019.