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Roundup: British GDP growth in Q1 unrevised at 0.3 pct, recovery on track

Xinhua, May 29, 2015 Adjust font size:

British gross domestic product (GDP) grew by 0.3 percent in the first quarter of 2015, unrevised from the previous estimate published a month ago, confirmed the Office for National Statistics (ONS) Thursday.

The quarterly growth pace was much less than the 0.6 percent in the fourth quarter of 2014, as well as slower than the market expectation consensus of a 0.4-percent increase. The lackluster performance of net trade is one of the main reasons constraining the growth.

NET TRADE DROPS

Data showed that British production output rose by 0.1 percent in Q1 2015 when compared to the three months prior. Service sector output increased 0.4 percent, while construction decreased by 1.1 percent over the same period.

In expenditure terms, British household expenditure in the first quarter of 2015 grew by 0.5 percent when compared to the three previous months. Government final consumption expenditure and gross fixed capital formation increased by 0.6 percent and 3.9 percent respectively, figures showed.

The most optimistic news was that business investment grew by 1.7 percent in Q1 2015, far better than the previous quarter's decrease of 0.9 percent.

However, exports declined by 0.3 percent, and imports increased by 2.3 percent on a quarter-on-quarter basis, data also showed. In terms of contribution to growth, net trade in Q1 dragged the economic growth by 0.9 percentage points.

Britain's GDP was estimated to have increased by 2.8 percent in 2014, compared with 2013, the same as the previously published estimate, said ONS.

The British statistics department releases three estimates for its quarterly GDP data.

TEMPORARY SLOWDOWN

Experts here said the worsening net trade was disappointing, although the slowdown of growth seems to be short lived.

Vicky Redwood, chief UK economist at Capital Economics, said in an analysis piece: "The lack of any upward revision to UK GDP in Q1 is a touch disappointing, but given the discrepancy between the weak GDP data and the more upbeat business surveys, a revision is still likely further ahead."

Redwood said: "Most striking is the big negative contribution of 0.9 percentage points from net trade - hardly good news from a rebalancing point of view."

But the London-based economic researcher believes that the Q1 slowdown was temporary, and that recovery is probably already "back on track" again.

Martin Beck, senior economic advisor to the EY ITEM Club, commented in a note: "We remain confident that with the tailwinds offered by very low inflation and borrowing costs and high levels of consumer and business confidence, growth should accelerate over the course of the year, with GDP expanding by 2.6 percent in 2015 as a whole."

However, the British economic forecasting body warned that Britain's economy continues to show a "distinct lack of rebalancing" from domestic to overseas demand.

"Given the risks and travails currently arising in the UK's major trading partners, notably the possibility of a Greek exit from the euro-zone and near-stagnation in the U.S. economy in Q1, an expansion that is heavily domestic in nature may not be a bad thing at present," said Beck. Endit