First economic contraction since 2023 raises concerns amid global and domestic pressures
Northern Ireland’s economy shrank by 0.6% in the first three months of 2025, bringing a year-long period of growth to a halt.
The latest figures from the Northern Ireland Composite Economic Index (NICEI) highlight this downturn, marking the first quarterly decline since the close of 2023.
Key Sectors See Sharp Declines
Construction saw the steepest drop, with output falling by 5.1% compared to the previous quarter. Industrial production, including manufacturing, also recorded a contraction. These sectors were chiefly responsible for the overall economic dip, according to the NICEI.
The services sector, which plays a dominant role in the region’s economy, held steady, avoiding a decline but offering no growth either.
Growth Still Outpacing Britain
Despite the quarterly setback, the broader economic trend remains positive. Northern Ireland’s economy expanded by 1.6% over the past year, outperforming Britain’s 1.3% growth rate.
On a rolling four-quarter basis, Northern Ireland registered a robust 2.7% increase, more than double the British average. Economic activity now sits 10% above pre-COVID-19 levels, with private sector output rising 10.5% since late 2019.
Much of this resilience can be attributed to the services sector, encompassing industries such as hospitality, financial services, and legal support, which has led the post-pandemic recovery.
Economic Uncertainty Clouds Outlook
Richard Ramsey, Professor of Economics at Queen’s University Belfast, called the latest figures a “reversal in fortunes” for the private sector.
While public sector roles and agriculture have provided some support, they have not been sufficient to counterbalance losses in construction and manufacturing.
Mr Ramsey also warned of looming global threats.
“The local economy is expected to see a growth rate of around one-third of last year’s figure,” he said, citing the expiry of the suspended US tariffs originally introduced by Donald Trump and recent domestic tax increases from April.
Agriculture Surges Against the Trend
In stark contrast to other sectors, Northern Ireland’s agricultural industry is thriving. Total Income from Farming (TIFF) is projected to rise by over 60% this year, climbing to £766 million from £471 million in 2023.
This remarkable boost stems from a combination of falling input costs and stronger prices for key commodities such as dairy, beef, and lamb.
Farmers are set to see their average business income more than double, thanks to reductions in the cost of feed, fertiliser, and machinery.
Agriculture Minister Andrew Muir commented: “My department is focused on helping farmers mitigate cost and price pressures while improving productivity and sustainability.”
As global uncertainties persist and domestic policy shifts continue to impact businesses, the coming months will be crucial in determining whether this downturn is a temporary blip or a sign of broader economic strain.
