Public spending will come under pressure and tough decisions lie ahead as the Stormont Executive works for economic growth, Minister for Finance Peter Robinson has warned.
But the DUP Minister also cited the enduring success of the Republic's economy and the potential for trading partnerships between North and South.
Addressing a briefing session for the business community in Belfast, he warned that the Executive's new budget and programme for government, which are being drawn up, will be devised in a much tighter financial environment.
"Unlike the previous devolution period, in the early years of the New Labour government, when there were significant additional resources, this Executive will have to make tough decisions," he added. "It is imperative that we get the programme for government and our priorities as an Executive right."
He said the time was right for the powersharing Executive to make up for the years of lost opportunity due to conflict and for decades of under-investment under direct rule.
A quick look at some economic indicators gave the impression that the Northern Ireland economy was performing well, with low unemployment, fast job creation and improving manufacturing data.
"But these positive statistics mask some fundamental problems that are likely to act as constraints for economic growth," he warned, adding that much of the improvement in the labour market has been in what he called "low value-added jobs", such as retailing and distribution.
"The productivity deficit is a key issue facing us," he said. "Creating high value-added employment is the key to reducing this deficit, and central to the drive for high value-added jobs will be enhanced performance in export markets. The domestic market of 1.7 million will not provide a driver for transformational economic growth. This can only come from undertaking economic activity which serves external markets." He said Northern Ireland now had an excellent opportunity to stimulate its exports sector.
"The fact that the current unemployment rate here is at a record low now presents an excellent opportunity to change the focus of support to further stimulate export potential. With the Republic of Ireland economy predicted to remain one of the most dynamic in Europe, there are clear opportunities for Northern Ireland businesses to both use the Republic of Ireland as an export market and to establish trading partnerships."
Mr Robinson said that there was a real need to attract investments that capitalise fully on Northern Ireland's potential and he singled out IT and the financial services sector as examples.
"Looking to the future, there is undoubtedly potential for further foreign direct investment in those sectors like the tradeable services that require proportionately more skilled labour. There is also considerable scope in a number of specific sectors including architecture, engineering, business management and consultancy, as well as creative entertainment."
He said that Northern Ireland faced a number of challenges including unacceptably high levels of poor educational attainment. He also pointed to the dominance of Westminster and a reluctance to allow Northern Ireland to tackle its problems in a different way from other regions.