United Kingdom GDP

United Kingdom

GDP rebounds in Q1 boosted by build-up in inventories

In the first quarter, GDP expanded 0.3% over the previous quarter in seasonally adjusted terms, according to a second estimate released by the Office for National Statistics (ONS) on 22 May. The reading confirmed the preliminary estimate released on 25 April and contrasted a 0.3% drop seen in the fourth quarter. In annual terms, growth picked up from 0.2% in Q4 2012 to 0.6%.

The main driver behind the improvement was total investment, which grew mostly on the back of an increase in inventories. In contrast, fixed investment deteriorated from a 0.2% drop to a 0.8% contraction. Private consumption also lost steam, moderating from a 0.3% expansion in Q4 to a 0.1% rise in Q1.

Exports of goods and services improved, stepping up from a 1.6% contraction in Q4 to a 0.8% drop in Q1. Imports also moderated the pace of decline from a 1.0% fall in Q4 to a 0.5% contraction. As a result, the net contribution from the external sector to overall growth stepped up from minus 0.2 percentage points in the fourth quarter to minus 0.1 percentage points in Q1.

In its latest inflation report from May, the Bank of England (BoE) projects the economy to grow 1.1% this year and 1.7% in 2014. FocusEconomics Consensus Forecast panellists are less optimistic than the BoE and expect the economy to grow only 0.7% this year, which is unchanged from the previous month's estimate. For 2014, the panel sees growth accelerating to 1.5%.


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United Kingdom GDP Chart

United Kingdom GDP Q1 2013

Note: Quarter-on-quarter changes of seasonally adjusted GDP and year-on-year variation in %.
Source: Office for National Statistics (ONS) and FocusEconomics Consensus Forecast.

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