United Kingdom: GDP contracts in fourth quarter amid lower investment
February 24, 2012
In the fourth quarter, GDP contracted a seasonally adjusted 0.2% over the previous quarter, according to the second estimate released by the Office for National Statistics (ONS) on 24 February. The figure was unrevised from the preliminary 25 January estimate, and marked the worst result since the final quarter of 2010. Compared to the same period last year, the economy grew 0.7%, slightly up from the 0.4% rise seen in the third quarter. The drop was mainly due to a decline in investment. In particular, gross fixed capital formation stepped further down from a 1.0% quarter-on-quarter contraction in the third quarter to a 2.8% decrease in the fourth. Moreover, although the build-up in inventories continued, their contribution to growth moderated, which according to the ONS, ?partly reflects some adjustment to the previous quarter's significant stock building?. That said, both private and government consumption stepped out of the red by expanding 0.5% (Q3 2011: -0.1% qoq) and 1.0% (Q3 2011: -0.3% qoq) respectively. Exports expanded 2.3%, contrasting the 0.7% contraction seen in the third quarter. Imports, meanwhile, accelerated only modestly from a 0.2% increase in the third quarter to a 0.4% expansion, thereby pushing the external sector's net contribution to growth from minus 0.3 percentage points in the third quarter to plus 0.6 percentage points in the fourth. In the full year 2011, the economy expanded 0.8%, down from 2010's 2.1% increase.