Trade boosted UK GDP by 1% in Q2 2015, says BCC report

9 September 2015

The UK trade deficit narrowed from £13.4bn in Q1 2015 to £9.1bn in Q2 2015, the lowest since Q2 2013, according to the latest British Chambers of Commerce (BCC) Global Monthly Economic Review.

The improvement was driven by a 
3.9% rise in exports in Q2, almost seven times the 
0.6% increase in imports during the same period. As a result, the review says, trade boosted UK GDP by one percentage 
point in Q2, the most since Q4 2011.

“This is in marked contrast to the previous quarter 
when net trade was a drag on growth. Business investment also rose by 2.9% compared with Q1 2015, the biggest rise since Q2 2014.”

The review adds that the Eurozone economy grew by 0.3% in Q2 2015. Although it reports that this was down slightly from the 0.4% growth in the previous quarter, it was still stronger than the average 0.2% quarterly growth in 2014.

The review says: “In annual terms, the Eurozone economy grew by 1.2% in Q2. Germany's economy, the biggest in the Eurozone, grew by 0.4% in Q1 2015, up from 0.3% growth in Q1. Economic growth in Greece picked up sharply, rising by 0.8% in Q2, after recording zero growth in the previous quarter.”

However the review says that, in contrast, France's economy did not grow at all in Q2, compared to the growth of 0.7% recorded in Q1.

The second estimate of US GDP revealed that the US economy grew at an annualised rate of 3.7% in Q2 2015, up from the first estimate of 2.3%, and more than six times the 0.6% growth recorded in Q1.

The review says: “The upgrade partly reflected a 3.2% rise in business investment in Q2, up from a forecast of a 0.6% decline. Consumer spending, which accounts for more than two-thirds of US GDP, was revised up to 3.1%, from the previous estimate of 2.9%. A strong jobs market and weak inflation, is helping to support US consumer spending.”

In spite of China cutting interest rates and devaluing its currency to make its exports more competitive, concerns over the outlook for the Chinese economy persist with stock prices falling by 16% in the past month.

China’s standing as the world's second biggest economy, accounting for about a quarter of global GDP growth, means that uncertainty about its outlook is starting to weigh on the global economy.

The review says: “Global stock prices dropped during the past month with UK stock prices declining by 10%, amid fears over a prolonged slowdown in China.”


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