As far as economic growth is concerned, the Northern Ireland economy ended 2016 with a bang.
According to the official Northern Ireland Economic Composite Index (NICEI), growth rebounded from Q3’s post-EU referendum dip (-0.7% q/q) to record growth of 2.1% q/q in the final quarter.
This represented the fastest rate of growth in 12 years. Both the public and private sectors recorded growth with construction posting the fastest rate of expansion of all sectors.
Belfast’s crane cluttered skyline is clearly evident in the latest batch of construction statistics. The private sector expanded by 2.6% q/q with output up 4.1% y/y. The latter marked the fastest rate of growth in a decade and helped to propel output to its highest level in over 8 years.
Despite this rapid rate of growth, private sector output in Q4 2016 was still some 4.5% below the level Q2 2007’s peak. The local private sector has now recouped two-thirds of the decline in output that occurred in the six-year period to Q2 2013.
Overall, even with the robust rates of expansion in the final quarter, 2016’s growth rate was pedestrian at 1.6% y/y – a slight improvement on the previous year (+1.5%). This conceals contrasting fortunes for both the public (-2.2% y/y) and private sectors (+2.8%).
The return of inflation alongside ongoing austerity is likely to act as a brake on economic growth in 2017 and 2018. In the medium term the outcome following Brexit will have a significant bearing on the UK’s and Northern Ireland’s economic growth rates.