Northern Ireland is forecast to have the lowest growth among UK regions this year and next.
A downturn in business investment is driven by continued uncertainty surrounding the Brexit negotiations, PwC business consultants said.
David Armstrong, PwC partner in Northern Ireland, said he expected a slow down in jobs growth and a squeeze on real household spending power due to rising inflation which could reach around 3% next year.
He added: “But somewhat stronger net exports, helped by the weaker pound, should dampen the scale of the fall in overall GDP growth this year.
“Considerable uncertainties remain around any medium-term economic conditions however, so Northern Ireland businesses should stress test their business and investment plans against alternative economic scenarios and also review the potential wider implications of Brexit for all aspects of their business.
“The welcome news is that Northern Ireland and the UK in general look set to avoid recession, but a combination of the current political situation, uncertainty over the region’s budgetary position and a lack of clarity around a post-Brexit border, may influence investment decisions.”
Northern Ireland will be the poorest performing UK region in 2018, joint lowest with the West Midlands, according to the latest UK Economic Outlook from PwC.
It also forecasts that Northern Ireland will deliver the lowest growth amongst the 12 UK regions in 2017.
PwC says Northern Ireland should deliver Gross Value Added (GVA) growth of only 0.9% in 2018, down from a forecast 1.2% this year.
Next year’s growth forecasts see Northern Ireland lagging behind Scottish growth of 1.1%, Wales (1.2%) and the UK average of 1.4%.