The economy in Northern Ireland faces long climb back to normal output
Last Friday’s figures from the Office for National Statistics (ONS) indicate that the United Kingdom economy continued its post-lockdown recovery in July.
The pace is, however, slackening.
It is early days, all these data include a lot of estimation, but it could be concerning that the initial growth spurt is already slowing down.
Whilst we don’t have as up-to-date data for Northern Ireland the likelihood is that the regional economy is tracking the United Kingdom performance.
In the month to July UK Gross Domestic Product (GDP) grew by 6.6%.
Under normal circumstances that would be an astronomical growth rate month on month but it actually represented a decline on the monthly growth in June which was 8.7%.
The UK’s recovery out of the lockdown recession began back in May when growth was 2.4%.
What is highly significant is that UK GDP in July was still 11.7% down on its pre-virus level in February (output in services was 12.6%, in construction 11% and in production sectors such as manufacturing down by 7%).
If we assume broadly similar trends are happening here in the Northern Ireland regional economy (the available ‘timely’ data such as unemployment levels, business confidence surveys, numbers furloughed all suggest that it is unlikely Northern Ireland is performing better than the UK trend) then what might be some of the implications for the local economy?
It is going to be long climb back to regain the levels of output we had prior to lockdown.
Such recovery could take years.
The data on GDP are one possible justification for the policy approach to containing the virus outlined by the Stormont executive on Thursday.
Instead of a general Northern Ireland lockdown, which had such a large economic impact, we now have restrictions relating to social gatherings in specific localities.
• Dr Esmond Birnie is senior economist at Ulster University Business School
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