The latest figures from Ulster Bank in their recent PMI Report suggest that the economic recovery in Northern Ireland has slammed on the brakes due to a combination of strong inflationary pressures and the Omicron variant of Covid-19 which has proven so infectious. Supply chain disruption is also still an issue for a great many businesses with supply delivery times lengthening further.
Northern Ireland Notches Up A Low Rate Of Growth
The PMI Report, as quoted in an article today on the Business Live website by David Elliott, showed that:
`the province notched up the lowest rate of growth of all 12 UK regions and the Republic in December.
On the PMI index it scored just 50.2, just fractionally above the key 50 level. Any score below 50 denotes a slowdown in economic activity while above 50 indicates growth.
The biggest drags on activity in Northern Ireland were the construction and services sectors while retail and manufacturing managed to post growth.`
Slow Growth, Inflation & Covid Issues
And in the same article, Richard Ramsey, Chief Economist at Ulster Bank in Northern Ireland, said:
“2022 is going to be dominated by three economic themes that were prevalent at the end of last year – slower growth, severe inflationary pressure, and the stop-start disruption associated with Covid.
“This might ease in the second half of the year, however, don’t forget Brexit. Whilst we should be over the hump of the pandemic by mid-2022, the same can’t be said for Brexit as some of the current grace periods come to an end in July.”
I think that Richard is probably right and as we move into the Spring we should see concerns over Covid begin to fade into the background. The Omicron variant, although exceptionally transmittable, does not appear to be giving the majority of people who get infected too severe symptoms and the vaccines are giving us great protection from becoming very ill from Covid too.
Inflationary Pressures Not Going Away
However inflation is not going to go away any time soon, retailers are increasing their prices at a record rate, as a consequence of materials becoming ever more costly to them. We also have the issue of higher gas and oil prices which are going to be passed on to consumers this year. All this adds up to a hard time ahead for many households as well as businesses.
One encouraging aspect right now though is that unemployment is at record low levels and output in most sectors of the economy is still rising, so there are definitely glimmers of light peering through the gloom.