United Kingdom: GDP growth decelerates in Q4
February 26, 2015
In the fourth quarter, GDP expanded a seasonally-adjusted 0.5% over the previous quarter, according to more detailed data released by the Office for National Statistics (ONS) on 26 February. The print was in line with both the preliminary estimate and market expectations. However, the expansion came in below the 0.7% increase observed in the previous quarter. Q4’s figure came on the back of an improvement in external demand, while the domestic demand performed worse compared to the previous quarter.
Private consumption grew a weak 0.3% in Q4, which was below Q3’s 0.7% increase. In addition, government consumption showed zero growth in the fourth quarter, which was a deterioration over the 0.5% increase observed in the previous quarter. Fixed investment swung from a 0.5% expansion in Q3 to a 0.5% contraction in Q4, thus marking the steepest decrease in over two years.
On the external side, exports rebounded to 3.5% growth in Q4 (Q3:-0.8% quarter-on-quarter), while growth in imports inched down from 1.4% in the third quarter to 1.3% in the fourth quarter. As a result, the external sector’s net contribution to growth swung from minus 0.7 percentage points in Q3 to plus 0.6 percentage points in Q4.
In annual terms, GDP grew 2.7% in the fourth quarter. The figure met the preliminary estimate and marked an acceleration over Q3’s 2.5% increase. In the full year 2014, the economy grew 2.6%, which was a significant improvement over 2013’s 1.7% expansion and marked the largest expansion in seven years.
Author: Dirina Mançellari, Senior Economist