Date: 10 April 2017

Exports: some encouraging signs

In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest GDP and balance of payments data:

  • The ONS’s third estimate of GDP growth for 2016Q4 was unrevised at 0.7% (QOQ).
  • At first glance the turn-round in net exports seemed to be by far the largest contributor to the growth. But the data were distorted by wide swings in trade in non-monetary gold (part of ‘erratics’).
  • However, after allowing for the distortions, net trade almost certainly contributed to growth in 2016Q4.
  • Household consumption made a significant contribution to growth in 2016Q4, though growth in future is expected to decelerate. The saving ratio fell significantly in 2016Q4, though the movement was exaggerated by a quirk in the data.
  • The deficit on the current account of the balance of payments improved in 2016Q4, but the degree of the improvement was also exaggerated by ‘erratics’. Nevertheless, the current account does seem to be improving on a trend basis, helped by an improving balance on primary income. The trade balance (goods and services) may also be improving as exports growth outstrips imports growth.

  • Other UK data suggest the economy remains fairly robust:
    • In the three months to January services output continued to grow, though growth effectively stalled in the month of January.
    • In the three months to February industrial production and construction continued grow, though they both slipped in the month of February.
    • Productivity (output per hour) increased by 0.4% (QOQ) in 2016Q4, suggesting an improved performance.
    • The amount outstanding on unsecured credit continued to grow robustly in February, though the growth rate appears to be decelerating.
    • The Markit/CIPS surveys continue to suggest fairly buoyant growth, though there were indications that some of the 2016Q4’s momentum weakened in 2017Q1.

    There have been four major Brexit developments in the past fortnight:

  • The Prime Minister triggered Article 50, formally notifying the EU of the UK’s decision to leave the EU, on 29 March.
  • The Department for Exiting the EU (DExEU) issued a White Paper outlining the objectives of the forthcoming Great Repeal Bill on 30 March.
  • European Council president Donald Tusk issued his ‘guidelines’ for the Brexit negotiations on 31 March. They will be discussed at a forthcoming summit on 29 April and are expected to be adopted.
  • The European Parliament passed a resolution, broadly supporting Tusk’s guidelines, on Brexit on 5 April.

Ruth Lea said, ‘Over the past year the main driver of growth has been household consumption, which is expected to slow this year. But it can be expected that improved exports will offset (at least in part) this slowdown. Recent evidence on exports has been encouraging.’ For full story:

Press enquiries:

Arbuthnot Banking Group PLC:

Ruth Lea, Economic Adviser
07800 608 674, 020 8346 3482
[email protected]
Follow Ruth on Twitter @RuthLeaEcon

Bell Pottinger:
Dan de Belder
020 3772 2561
[email protected]

Arbuthnot Banking Group plc published this content on 10 April 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 10 April 2017 10:10:06 UTC.

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