THE NORTH’S economy will shrink by 3 per cent this year but it will remain the UK region least affected by the global recession according to a new economic report to be published today.
Business advisers PricewaterhouseCoopers (PwC) says that the North is performing well in comparison to other UK regions and historic levels.
But PwC also warns that if the recession deepens and the banking crisis continues there is a possibility the economy could decline even further.
Philip McDonagh, the business advisers’ chief economist in the North, is warning that unemployment will rise sharply in 2009.
But he says it is important to keep the rise in context and it is unlikely that jobless figures will reach excessively high levels last seen in the late 1980s.
“Grave as the problems are, Northern Ireland is less impacted than either other regions of the UK or the Republic and there are genuine opportunities to be grasped.
“The greatest challenge over the next few months is to restore confidence and not to become paralysed into doing nothing by the prevailing mood of gloom and doom,” Mr McDonagh said.
PwC expects the Northern Ireland economy to show some recovery around the third quarter of 2010 with average growth not much more than zero.
According to Mr McDonagh there is already some evidence that the North’s housing market may now see an end in sight to its woes.
“Average house prices are now approaching the cost of construction while the ratio of average house prices to average earnings has fallen sharply to levels of the early part of the decade.”
The latest PwC Northern Ireland Economic Review highlights how most sectors contracted last year with the construction sector one of the hardest hit.
But the business advisers still believe there are still some reasons for people in the North to remain upbeat.
PwC points to the fact that interest rates are at a historic low with consumer price inflation at 3 per cent and falling.
