United Kingdom: Economy dodges triple-dip recession in the first quarter
April 25, 2013
In the first quarter, GDP expanded a seasonally-adjusted 0.3% over the previous quarter, according to a preliminary estimate released by the Office for National Statistics (ONS) on 25 April. The reading beat market expectations of a 0.1% increase and, as a result, the British economy avoided falling in a triple-dip recession.
The improvement in Q1 was led by the all-important services sector, which accounts for more than three-quarters of the overall economy and which expanded a solid 0.6% over the previous quarter (Q4 2012: 0.0% quarter-on-quarter). Moreover, the industrial sector swung from a 2.1% contraction in Q4 to a 0.2% expansion in Q1. In contrast, both agriculture and construction recorded contractions in the first quarter, falling 3.7% (Q4: -0.5% qoq) and 2.5% respectively (Q4: +0.8% qoq).
In annual terms, GDP growth picked up from a mere 0.2% in the fourth quarter to 0.6% in the first quarter. In its latest inflation report from February, the Bank of England projects the economy to grow 0.9% this year and 1.6% in 2014. FocusEconomics Consensus Forecast panellists are less optimistic and expect the economy to grow 0.7% this year, which is down 0.1 percentage points from the previous month's estimate, but a notch above the revised 0.6% projected by the Office for Budget Responsibility (OBR). For 2014, the panel sees growth accelerating to 1.5%.