Coronavirus: NI economy shrank again at end of 2020

By John Campbell
BBC News NI Economics & Business Editor

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Image caption,
Retail and hospitality have faced the tightest coronavirus restrictions

Northern Ireland's economy shrank by 1.4% between the third and fourth quarters of last year, official figures suggest.

The fourth quarter was marked by tightening lockdowns, a short relaxation in December, before a further lockdown from 26 December.

The biggest impact was on the services sector.

Its output fell by 2.5% quarter on quarter.

Retail and hospitality, which are the biggest parts of the service sector, faced the most severe lockdown measures.

However, manufacturing output showed only a small decline in output, while there was growth in construction and public services.

The fourth quarter performance followed a huge decline and bounce back where the economy contracted by 13% in the second quarter before bouncing back by 15% in the third quarter.

Image caption,
Conor Lambe says considerable uncertainty remains about the future impact of the pandemic

The figures, from the NI Statistics and Research Agency, suggest the economy was ultimately about 3% smaller in the fourth quarter of 2020 compared to the same period in 2019.

Meanwhile, a forecast from Danske Bank predicts the economy will have continued to contract in the first quarter of 2021, but will grow strongly later in the year.

'Considerable uncertainty'

The bank's chief economist, Conor Lambe, suggests growth of 4.8% this year as pandemic restrictions are eased, accelerating to 5.8% in 2022.

"We think that the gradual reopening of the economy will see economic output begin to grow again from the second quarter of 2021 onwards," he said.

"Measures put in place by policymakers, such as the recently extended furlough scheme, have proven to be a key source of support for the economy since the start of the pandemic and are also expected to play an important role in the recovery."

But he cautioned that "considerable uncertainty" still exists around how the re-opening of the economy will impact coronavirus case numbers and the pace at which the restrictions can be eased.