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UK economy saw no growth at the end of 2019

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The UK economy saw no growth in the final three months of 2019, as manufacturing contracted for the third quarter in a row and the service sector slowed around the time of the election.

The Office for National Statistics (ONS) said the car industry had seen a particularly weak quarter.

The ONS figures also showed the economy grew by 1.4% in 2019, marginally higher than the 1.3% rate in 2018.

Recent surveys have suggested that the economy has picked up in the new year.

Ruth Gregory, senior UK economist at Capital Economics, suggested that the flat growth seen at the end of the year would “prove to be a low point”.

She added: “The pick-up in the surveys of activity and sentiment suggest the first quarter will be much better.

“The GDP figures were not quite as bad as we had feared in quarter four. The stagnation in GDP beat our forecast of a 0.1% quarter-on-quarter fall.”

In December alone the economy grew by 0.3%, the ONS said, reversing the decline seen previously in November.

“It’s likely that political uncertainty and unwinding stockpiles caused the economy to flag at the end of last year,” said Tej Parikh, chief economist at the Institute of Directors.

“However, firms entered 2020 with more of a spring in their step. Confidence has shot up, while hiring plans and investment intentions have also risen a notch, but the post-election bounce may tail off.

Rob Kent-Smith, the ONS’s head of GDP, said: “There was no growth in the last quarter of 2019 as increases in the services and construction sectors were offset by another poor showing from manufacturing, particularly the motor industry.”

The services sector – which accounts for more than three-quarter of the UK economy – grew by just 0.1% in the final quarter of 2019, while the construction sector grew by 0.5%.

However, the manufacturing sector saw output fall by 1.1%. That came after some car factories paused work in November in case Britain left the European Union without a deal on 31 October.

The ONS revised up the growth figure for the third quarter of 2019 to 0.5% from its previous estimate of 0.4%.

The last three months of 2019 also saw the trade deficit in goods and services widen to £6.5bn from the £4bn deficit seen between July and September.

A deficit occurs when the value of a country’s imports in goods and services exceeds what it exports.

The deficit widened largely because of a shrinking of the surplus in UK trade in services.

By contrast, the goods trade deficit shrank in the last three months of 2019. That was mostly accounted for by a £2.2bn decrease in machinery and transport equipment imports, which could suggest that orders might have been brought forward to avoid the (postponed) October Brexit deadline.

For 2019 as a whole, the trade deficit for goods and services narrowed slightly by £0.5bn to £29.3bn.

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Bank of Canada says it could take another year before economy recovers – Financial Post

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Article content continued

The Bank of Canada is still wary about the future. It’s calling its new outlook a “central scenario,” not a forecast. There is less detail than usual, but it does come with numbers: policy-makers think GDP will bounce to an annual growth rate of 7.1 per cent in the third quarter from the 13.1 per cent contraction in the second quarter.

Things should start to feel better during what the central bank is calling the “reopening” phase. But the rebound could be short and sweet, just as the downturn was quick and brutal. As far as the best minds at the Bank of Canada can tell, we’re setting up for a long “recuperation” phase, during which growth will slow from its current post-recession burst.

The Bank of Canada’s central scenario predicts GDP will contract 6.8 per cent in 2020 and then increase by 4.9 per cent in 2021 and 3.2 per cent in 2022. In other words, it could take another year to get back to where we were at the end of 2019, and maybe longer because there are more negative variables at work than there are positive ones.

“Overall, the risks appear to be tilted to the downside, largely because of the potential for a second wave of the virus,” policy-makers said in the Monetary Policy Report.

Financial Post

• Email: kcarmichael@nationalpost.com | Twitter:

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Bank of Canada set to make rate announcement, release economic outlook – Lethbridge News Now

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By Canadian Press

Jul 15, 2020

OTTAWA — The Bank of Canada will make its latest interest rate announcement today and update its outlook for the economy.

The central bank’s key interest rate has been at 0.25 per cent since March when it was dropped in response to the economic fallout from COVID-19.

Governor Tiff Macklem has seemingly ruled out any further cuts, adding that the central bank doesn’t plan to raise its key rate until well into an economic recovery.

In his first speech as governor late last month, Macklem said the central bank expects to see growth in the third quarter of this year as restrictions ease.

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Bank of Canada set to make rate announcement, release economic outlook – CTV News

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OTTAWA —
The Bank of Canada will make its latest interest rate announcement today and update its outlook for the economy.

The central bank’s key interest rate has been at 0.25 per cent since March when it was dropped in response to the economic fallout from COVID-19.

Governor Tiff Macklem has seemingly ruled out any further drops, adding that the central bank doesn’t plan to raise the rate until well into an economic recovery.

In his first speech as governor late last month, Macklem said the central bank expects to see growth in the third quarter of this year as restrictions ease, but warned of a “prolonged and bumpy” course to recovery.

The bank will outline what Macklem described as a “central planning scenario” for the economy and inflation, as well as related risks — such as local, but not national, lockdowns.

The Bank of Canada said in April that it expected inflation to be close to zero in the second quarter.

The federal government’s economic “snapshot” last week pegged inflation at 0.5 per cent for this year, then rising back to two per cent in 2021.

The reading was based on the average of forecasts from 13 private sector economists.

Statistics Canada data showed the consumer price index posted a year-over-year decline of 0.2 per cent in April followed by a drop of 0.4 per cent in May as lockdowns put a damper on consumer spending.

This report by The Canadian Press was first published July 15, 2020

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