NORTHERN Ireland’s economy contracted by 0.6% in the first quarter of 2025 after a full year of steady growth.
This downturn, revealed in the latest Northern Ireland Composite Economic Index (NICEI), marks the first economic reversal since the end of 2023.
Construction output dropped by 5.1% quarter-on-quarter, while industrial production, particularly manufacturing, also shrank.
The NICEI attributes the quarterly fall to these sectors, though it noted that services – the economy’s largest sector – remained flat rather than in decline.
Despite the recent contraction, the overall economic picture is more complicated.
Year on year, Northern Ireland’s economy has grown by 1.6%, outperforming Britain’s 1.3% growth.
On a rolling four-quarter basis, growth stood at 2.7%, double the British average of 1.3%.
Economic output is now 10% above pre-pandemic levels, with private sector output alone 10.5% higher than in late 2019.
The services sector, covering everything from hospitality to legal services, has been a key driver of this post-Covid recovery.
Richard Ramsey, Professor in Economics at Queen’s University Belfast, said the figures point to a “reversal in fortunes” for the private sector.
While public sector jobs and agriculture provided some stability, they were not enough to offset losses elsewhere.
Mr Ramsey also raised concerns about global factors.
The temporary suspension of US tariffs introduced by Donald Trump is set to expire soon.
The uncertainty around potential new tariffs has already led to revisions in growth.
“The local economy is expected to see a growth rate of around one third of last year’s figure,” he said, noting that businesses are already grappling with new tax burdens introduced in April.
In contrast, agriculture in Northern Ireland is enjoying a remarkable boom.
Total income from farming (TIFF) is expected to rise by over 60% this year, reaching £766m – up from £471m in 2023.
The increase is driven by reduced input costs and improved prices for dairy, beef and lamb.
Average farm business income is projected to more than double, thanks to falling prices for feed, fertiliser, and machinery.
Agriculture Minister Andrew Muir said in a public statement: “My department is focused on helping farmers mitigate cost and price pressures while improving productivity and sustainability.”