United Kingdom GDP Q4 2016

United Kingdom

United Kingdom: Economy stays strong in Q4

January 26, 2017

In the final quarter of last year, the United Kingdom’s economy defied fears of an economic slowdown and GDP expanded at another robust rate. The UK posted a 2.0% growth rate overall last year, the fastest increase in the G7 countries. Economic activity throughout 2016, particularly in the second half of the year, was supported by accommodative monetary and fiscal policies as well as by the depreciation of the currency, which positively affected demand for the country’s exports.

In the fourth quarter, GDP expanded a seasonally-adjusted 0.6% over the previous quarter, according to a preliminary estimate released by the Office for National Statistics (ONS) on 26 January. The print was identical to the increase seen in the previous quarter and met market expectations.

Improvements were recorded across all sectors of the economy except for services, which decelerated, though still expanded at the fastest rate overall. The agricultural sector swung from a 0.7% contraction in the third quarter to a 0.4% increase in the fourth quarter. The construction sector expanded a dismal 0.1% in Q4, which was nevertheless better than the 0.8% decrease seen in Q3. Growth in industry was flat in the final quarter of the year, improving over the 0.4% decrease in the third quarter.

In annual terms, GDP expanded 2.2%, matching the pace of expansion recorded in the third quarter.

The Central Bank expects the economy to expand 1.4% in 2017 and 1.5% in 2018. This month, FocusEconomics’ panelists have upgraded their GDP forecast for 2017 and the Consensus Forecast now foresees 1.1% growth—up 0.2 percentage points from last month’s estimate. The Consensus Forecast shows GDP expanding 1.3% in 2018.

Author:, Senior Economist

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United Kingdom GDP Chart

United Kingdom GDP Q4 2016

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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