United Kingdom: Economy expands more than initially projected in Q2
August 29, 2013
In the second quarter, GDP expanded a seasonally-adjusted 0.7% over the previous quarter, according to more detailed figures released by the Office for National Statistics (ONS) on 23 August. The reading was revised up from the preliminary estimate of a 0.6% expansion and came in slightly above market expectations, which also had GDP growing at 0.6%. Revised figures showed that the acceleration reflected an increase of 0.4% in domestic demand, which contrasted the 0.4% drop in the first quarter, as well as an expansion of 1.7% in fixed investment (Q1: +0.2%). On the other hand, private consumption expanded at a 0.3% pace, moderating from 0.5% in Q1. Exports of goods and services jumped from a contraction of 0.1% in Q1 to an expansion of 3.6% in Q2. Imports also improved in Q2, expanding 2.5% over the previous quarter (Q1: -2.0%). The external sector's net contribution to the overall economy dropped to plus 0.3 percentage points, down from plus 0.6 percentage points in the previous quarter. The Bank of England (BoE) raised its projections in the latest inflation report from August. The BoE now expects the economy to grow 1.4% this year and 2.5% next year (previously reported: 1.2% and 1.7% respectively). FocusEconomics Consensus Forecast panellists are less optimistic and expect the economy to grow 0.7% this year, which is unchanged from the previous month's estimate. The panel's 2013 estimate is a notch above the revised 0.6% the Office for Budget Responsibility (OBR) has projected. In 2014, the FocusEconomics panel sees growth accelerating to 1.5%.
Author: Dirina Mançellari, Senior Economist