UK Q1 GDP revised higher due to methodological changes

FXStreet (Mumbai) – The third and final GDP report released by the UK office for National Statistics on Tuesday showed the economy (in volume terms) expanded 0.4% quarter-on-quarter, beating the previous estimate of a 0.3% rise.

Year-on-year the GDP was revised higher to 2.9%, compared to the expected upward revision to 2.5% from the initial estimate of 2.4%.

Methodological changes

The ONS report says revisions for GDP in volume terms are mainly due to the introduction of the interim solution for the Construction and Cost Price Indices, which have impacted on both the construction industry and gross fixed capital formation estimates.

Consumer spending rose 0.9% in the three months through March, and business investment grew 2%. Exports rose 0.4 percent and imports increased 2.3%. Net traded subtracted 0.6 percentage point from growth.

Current account deficit narrowed

Meanwhile, a separate report showed the current account deficit narrowed to 26.5 billion pounds, or 5.8 percent of GDP.

The decline in the current account deficit is a welcome development. The Bank of England, had said in April that it could, “in adverse circumstances, trigger a deterioration in market sentiment.”

The third and final GDP report released by the UK office for National Statistics on Tuesday showed the economy (in volume terms) expanded 0.4% quarter-on-quarter, beating the previous estimate of a 0.3% rise.

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