Coronavirus: NI economy ‘to shrink by 7.5% this year’

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The Northern Ireland economy will shrink by 7.5% this year as a result of coronavirus, according to a Danske Bank economist.

That is relatively optimistic compared to some other forecasts.

The Ulster University Economic Policy Centre has forecast a contraction of up to 10%.

Danske chief economist Conor Lambe said a 7.5% fall still represented “a staggering decline in economic activity”.

He said the forecast is being made in a climate of “extremely high uncertainty”.

Gradual recovery

Mr Lambe’s forecast is based on the assumption that the lockdown remains in place until somewhere between the end of May and the middle of June before gradually being lifted, with some social distancing measures expected to remain for a longer period.

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That would mean a fall in output would be largely limited to the first two quarters of this year, with activity beginning to recover gradually in the second half of this year and into next year.

This is what is referred to as a “v-shaped recovery”.

“It is important to say that, despite the expected return to positive annual growth rates from 2021, total economic output may not return to its pre-coronavirus level until late in 2022 or into 2023,” Mr Lambe added.

He said that those sectors most affected by ongoing social distancing would face the biggest falls in output with accommodation and food down 17% and arts, entertainment and recreation down 16%.

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