Growth In Global Economy Will Boost Exports In Northern Ireland, Says Bank

The global economy is set to grow by more than 3% this year with Europe rebounding at its fastest in four years, according to a major report from Danske Bank today.

And the bank’s chief economist Angela McGowan said that’s “good news for Northern Ireland”, with growth in key export markets such as the US and Europe helping to fuel the economy here.

Growth across the world is expected to improve, and inflation predicted to pick up, according to the Global Scenarios report.

That means the economy could expand by 3.4% this year, growing to 3.8% in 2016.

And while the report shows a disappointing first quarter in 2015, the US and China are expected to pick up speed in the next few months, while in Europe the data has “surprised on the upside”.

The European economy is now growing at the fastest pace since 2011, buoyed by low levels of inflation fuelling things like household spending.

Danske Bank has predicted the euro area will grow by 1.5% this year.

“Although GDP has rebounded in Europe and unemployment has been on a downward trajectory, the unemployment level at 11.1% still remains relatively high,” Ms McGowan said.

“We believe that the long-lasting slowdown experienced in Europe has done some structural damage to the region and reduced its overall productive potential.”

And a booming US economy – despite a slow start to the year – will also have a knock-on effect on tourism spending in Northern Ireland.

“A healthy world economy augers well for local export levels, tourism,foreign direct investment and overall sentiment levels for the business sector.

“As the economy in Northern Ireland struggles with domestic issues such as welfare reform and public spending cuts, the business community can take some comfort from the fact that market opportunities are gaining pace at the global level.”

While the US has had a tricky first quarter, the report says it is “already seeing jobless claims declining, spending indicators” rebounding – with housing activity also strengthening in the second quarter.

Despite low energy investment, the US is expected to grow by 2.2% in 2015.

But it is the emerging markets which are set to experience the biggest increase in the coming months. Growth in China slowed to 5% in the first quarter but it set to pick up again – rising to almost 7% for the year.

“Overall the global picture is a fairly healthy one but of course there is variation among regions,” Ms McGowan said.

“One of the most important themes in the second half of this year will be the reduction in deflation fears as the global economy experiences a fairly sharp rise in inflation in the second half of the year.

“The low oil price has already begun to reverse and this combined with reduced slack in labour markets should see headline inflation rates move upwards.”