THE NORTH’S economy will grow at a much slower rate than previously forecast this year, according to new economic research which suggests that recessionary clouds continue to block any rays of recovery.

Although the local economy is expected to show some signs of growth, it is unlikely to return to pre-recession growth levels until the latter half of 2012, says the latest Quarterly Sectoral Forecasts report published by Northern Bank.

It foresees growth of no more than 1 per cent by the end of the year, down from a projection of 1.3 per cent last march.

Angela McGowan, Northern Bank chief economist, said the region’s economy was under pressure from a number of negative influences, including subdued consumer confidence.

She said the level of fragility in the euro zone and the prospect of sweeping public sector budget cuts in the North all added up to a turbulent period ahead.

“The downward revision...is disappointing but the second quarter of 2010 has been turbulent. The run-up to the general election in the UK resulted in open public debates about the state of the public finances and left households and business in a limbo with regard to their future financial positions.”

The report predicts that while some sectors, including manufacturing, will continue to build on their fragile recovery, others will struggle, resulting in further job losses.

It says construction-related sectors are likely to suffer the greatest contraction, while the business services sector will grow much more slowly than hoped.

Among the sectors which should escape the worst of the slowdown are the hospitality industry and the health sector, both of which are projected to expand by over 3 per cent this year.

Ms McGowan believes the retail sector will also deliver growth close to 3 per cent despite the knock-on effect of a drop in cross-Border trade as a result of the recent weakening of the euro.