UK economy shrinks as Brexit looms

Britain will exit from the European Union later this month. (AFP)
Updated 10 October 2019

UK economy shrinks as Brexit looms

  • Gross domestic product — the combined value of all goods and services produced in the economy — slid 0.1 percent in August from July

LONDON: Britain’s economy contracted in August, official data showed Thursday ahead of the nation’s exit from the European Union later this month.
Gross domestic product — the combined value of all goods and services produced in the economy — slid 0.1 percent in August from July, the Office for National Statistics said in a statement.
That contrasted with upwardly-revised monthly expansion of 0.4 percent in July.
On a brighter note however, the ONS also revealed that the economy grew 0.3 percent in the three months to August compared with the previous quarter.
“Growth increased in the latest three months, despite a weak performance across manufacturing, with TV and film production helping to boost the services sector,” said Rob Kent-Smith, head of GDP at the ONS.
Sterling barely budged on the monthly reading, which was only moderately worse than market expectations of zero growth.
“The most recent GDP readings from the UK have shown a contraction in month-on-month terms — but taking a step back and looking at the bigger picture, it does not appear quite so bad,” noted XTB analyst David Cheetham.


China exports, imports in deeper contraction as US tariffs bite

Updated 43 min 43 sec ago

China exports, imports in deeper contraction as US tariffs bite

  • Downbeat data likely to reinforce expectations that Beijing needs to introduce more stimulus measures to avert a sharper economic downturn

BEIJING: China’s exports fell at a faster pace in September while imports contracted for a fifth straight month, pointing to further weakness in the economy and underlining the need for more stimulus as the Sino-US trade war drags on.
The downbeat data is likely to reinforce expectations that Beijing needs to introduce more stimulus measures to avert a sharper economic downturn, despite tentative signs of a thaw in tense trade relations between the world’s top economies.
Following talks last week, US President Donald Trump on Friday outlined the first phase of a deal to end the trade war and suspended a threatened tariff hike set for Oct. 15. But existing tariffs remain in place and officials on both sides said much more work is needed before an accord could be agreed.
September had marked another major escalation in the dispute, with Washington imposing 15 percent tariffs on more than $125 billion in Chinese imports from Sept. 1, and Beijing hitting back with retaliatory levies.
September exports fell 3.2 percent from a year earlier, the biggest fall since February, customs data showed on Monday. Analysts had expected a 3 percent decline in a Reuters poll after August’s 1 percent drop.
“The headline figures suggest that global demand softened last month, adding to the pressure from the US tariffs that went into effect in September,” said analysts at Capital Economics.
Some economists attributed the deterioration in exports to a fading in the so-called “front-loading” effect. Some Chinese firms had rushed to ship goods to the United States ahead of the September deadline, supporting overall July and August export readings.
Total September imports fell 8.5 percent after August’s 5.6 percent decline, the lowest since May. Analysts had expected them to fall by 5.2 percent.
Despite more than a year of growth boosting measures, China’s domestic demand has remained stubbornly weak as economic uncertainty weighs on business and consumer confidence and discourages fresh investment.
China reported a trade surplus of $39.65 billion last month, compared with a $34.84 billion surplus in August. Analysts had forecast $33.3 billion.
Its trade surplus with the United States stood at $25.88 billion in September, narrowing from August’s $26.96 billion.
China’s exports to the United States fell 10.7 percent from a year earlier in dollar terms in January-September, while US imports dropped 26.4 percent during that period, the customs data showed.
Though President Trump had agreed not to proceed with a hike in tariffs set for Tuesday, US Trade Representative Robert Lighthizer said Trump had not made a decision about tariffs that were subject to go into effect in December.
Analysts believe China’s economic growth cooled further in the third quarter from a near 30-year low of 6.2 percent hit in April-June, and is threatening to breach the lower end of the government’s full-year target of 6.0-6.5 percent.
Some economists forecast growth could fall into the upper 5 percent range in 2020 due to a combination of cyclical and structural factors.