UK exporters must continue to focus efforts into faster growing emerging nations - ITEM Club
Nida Ali, economic advisor to the EY ITEM Club, comments on today’s IoP and trade balance figures:
- Today's figures are generally encouraging however the downgrade to production in Q4 could cause GDP to be revised down
- Trade figures surprised and net trade is likely to contribute strongly to growth in Q4
- The Eurozone crisis continues to cast a shadow on the economic outlook and UK exporters must continue to move their focus towards faster growing emerging nations
“Today’s figures are generally encouraging with Q4 ending on a high for manufacturers. However, stemming from a steep decline in mining and utilities, the Q4 numbers for industrial production as a whole have been significantly revised down when compared with the GDP release. This points to a potential downward revision to GDP in Q4.
“The trade figures on the other hand pleasantly surprised and have held up well over the past three months, given the headwinds that exporters have faced. With export volumes growing strongly in Q4 and imports falling, net trade is likely to have made a strong contribution to Q4 GDP growth.
“These figures further reduce the chances of a technical recession. However, short-term growth prospects are still dominated by downside risks and the Eurozone crisis continues to cast a shadow on the outlook for exports and manufacturing. The domestic economy is struggling against high unemployment and fiscal austerity, making the UK heavily dependent on exports to power the recovery.
“It is noticeable from these figures that our trade position with non-EU countries improved significantly over the latter months of last year. With the outlook for European markets remaining uncertain, the onus will be on UK exporters to continue efforts to tap into faster growing emerging nations.”