Northern Ireland's economy is showing signs of recovery after two difficult years, but forecast growth will be too slow to close the prosperity gap with the UK, according to a major economic review published today.
Business advisers PricewaterhouseCoopers said the local economy had been insulated from the worst of the global recession by a combination of high public expenditure and a better-than-expected UK economic performance during 2001.
Their annual Review and Prospects for the Northern Ireland Economylaunched today said the local economy should grow by about 2 per cent in 2002, slightly ahead of the UK, and if the recovery continued the region's GDP growth should increase to 2.5 per cent in 2003.
However, PwC said consistent annual growth of well over 3 per cent was necessary to help fund essential public services, redress underlying structural weaknesses in the Northern Ireland economy and close the prosperity gap with the rest of the UK.
Managing partner Mr Stephen Kingon said: "Growing Northern Ireland's economy by 2 per cent per annum is not good enough. To meet the needs of a growing workforce, the effects of increased competition and the challenges of EU enlargement, Northern Ireland needs GDP growth of more than 3 per cent a year for the rest of the decade."
The review included a major survey of 300 of Northern Ireland's largest companies and revealed that while most were anticipating growth over the next year, the level of anticipated growth in the business community was at a nine-year low.
More companies - particularly the larger, foreign-owned firms - were consolidating their operations than at any time since the early 1990's.
Growing concerns about political stability, low-cost international competition and sluggish recovery had combined to depress business confidence and investment over the past year.
The review said that, after slowing rapidly in late 2000, the Northern Ireland economy continued to perform sluggishly throughout 2001 - hit by the US economic downturn impacting on EU and UK demand and the continued strength of sterling in export markets.
- Overall growth of 2.1per cent - just below the UK average of 2.2 per cent
- Manufacturing output fell by 8.9 per cent - almost half the UK fall of 4.5 per cent
- Employment grew by 0.6 per cent, half the 2000 level but still twice that of the UK
- Unemployment increased by 0.5 per cent to 6.3 per cent.
- Average earnings grew by 4.1per cent - well above the UK rate of 2.9 per cent but remained the lowest among the regions.
- Average house prices rose by 7.1 per cent - well below the UK average of 12 per cent.
PwC said Northern Ireland created just under 4,000 net new jobs during 2001, less than half the year before. Nevertheless the year closed with a record high of 647,570 in employment - 12.3 per cent more than in 1995.
However, long-term unemployment remained the highest in the UK and youth unemployment was the highest in the nation - with young people accounting for over a quarter of the jobless total.
PA