The worst of the house-building downturn may have passed, says one of the top local banks.

Ulster Bank's latest Quarterly Economic Review features commentary by their economist, Richard Ramsey .

He said key indicators suggest the worst of the economic gloom is behind us and that the most serious phase of the house-building crisis has passed.

The expert also suggested that the rate of job losses had eased: "We expect the Northern Ireland economy to contract by around 4% this year, following a decline of one per cent last year.

"We expect this to be broadly in line with the UK average and for Northern Ireland to fare no better than the UK as a whole over the course of the entire downturn," he said, noting that the UK economy is to return to growth next year.

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"The biggest challenge is to recover the significant amount of output lost during the recession," he continued.

"Next year, we predict the local economy will grow by around one per cent, compared to around 1.4% for the UK as a whole.

"Beyond that, it is our view that Northern Ireland's sustainable growth rate will be two per cent per annum on average, which we expect to be below the UK average," he suggested.

Meanwhile, while official figures released yesterday showed unemployment in Northern Ireland had risen above 50,000, an all-Ireland survey related that the economic decline may have bottomed out.

InterTradeIreland's Director of Strategy Aidan Gough said: "The emerging picture points to a U-shaped recession - the question now is how wide the trough will be?

"Restoring competitiveness is the biggest challenge facing firms and they are currently seeking to reduce costs across the board in order to be able to take advantage of any upswing."

The survey, involving telephone interviews with 1,000 owner/managers north and south, was carried out last month by Millward Brown Ulster and covers the period April to June 2009.

The survey confirmed southern companies are continuing to suffer more than northern firms, reporting a drop in turnover of 72% compared to 44%.

The sectors worst affected are manufacturing, construction and the hospitality industry.

See: Irish Business Turnover Still Falling

(BMcC/KMcA)