NI Economy: Figures suggest technical recession in summer 2022

The construction sector showed the worst performance in the third quarter with output down 0.4%

Northern Ireland entered a technical recession in the summer of 2022, official figures suggest.

A technical recession refers to two consecutive quarters of shrinking economic output.

NI Statistics and Research Agency (Nisra) figures suggest output fell by 0.3% in the second quarter of 2022 and a further 0.3% in the third quarter.

The construction sector showed the worst performance in the third quarter, with output down 0.4%.

This was compared to the previous quarter.

Although there have now been two quarters of contraction, economic output was still 0.5% higher compared to the third quarter of 2021 and 4.1% above the pre-pandemic level in the autumn of 2019.

Northern Ireland was last in a technical recession at the start of 2020, due to the extraordinary impact of the pandemic, but quickly returned to growth.

Weakness of construction

Most economists expect this downturn to be longer lasting as high energy prices and other inflationary pressures reduce consumer spending.

Nisra said the downturn in the third quarter was driven by the weakness of construction.

Services, which is the largest sector of the economy, drove the economy recovery after the pandemic but it faltered in the third quarter with output remaining flat.

Both the production sector, which is mainly manufacturing, and the public sector showed marginal quarterly growth.

• Services sector shrinks as manufacturing grows

• Interest rates raised to highest level for 14 years

• Services sector grows as retail falters

The UK as a whole avoided technical recession in the third quarter of 2022: second quarter output was up by 0.1% while in the third quarter output shrank by 0.3%.

The UK output figures for the final quarter of 2022 will be published next month though monthly figures for November will be published tomorrow.

The Ulster University Economic Policy Centre (UUEPC) has estimated that the output of the NI economy will fall by 1.2% in 2023.

The forecast for 2024 is growth of 1.7%, with a similar outlook for the UK as a whole.