The UK economy grew by 0.4% over the first quarter of 2016, lower than the 0.5% forecast and the previous quarter growth of 0.6%. Services increased by 0.6%, compared to 0.8% last quarter; this fall was mainly due to the slowdown in growth of the business services and finance sector, where growth fell from 0.7% to 0.3%. Mining and quarrying decreased by 2.2%, the same as the previous quarter, and following 0.3% growth in the fourth quarter of 2015, construction fell by 0.9%. Interest rates have now been kept at a historic low of 0.5% for seven years. The Bank of England revised its inflation expectations downwards for 2016 because of the increasing fragility of the global economy and uncertainty relating to the British EU Referendum.
The Euro Area as a whole expanded by 0.5% in the first quarter of 2016, higher than the previous quarter’s growth of 0.3% but lower than the 0.6% forecast. The European Central Bank cut the benchmark refinancing rate to 0% in March, a record low, while quantitative easing will be kept at €80 billion per annum. It is expected that rates will remain at 0% for some time, or perhaps become negative with the potential for deflation in 2016. Germany grew 0.7% after growing 0.3% in both of the previous two quarters. This was the highest figure since the first quarter of 2004 and above market expectations of 0.5%. The French economy grew 0.5%, higher than the 0.3% of both the forecast and previous quarter. Italy grew by 0.3% as forecast, higher than the 0.1% growth rate of the previous quarter. This fifth consecutive quarter of GDP growth was driven by domestic demand while net exports fell. Spain has grown consistently at 0.8% for the past three quarters while Greece contracted 0.4% following the revised 0.1% growth figure for the fourth quarter of 2015.
The US experienced a relatively weak annualised quarterly growth rate of 0.5%, compared to the 1.4% of the previous quarter and the 0.6% forecast. Personal consumption growth slowed, growing 1.9% compared to the 2.4% of the previous period. After spending on durable goods increased by 3.8% in the fourth quarter of 2015, spending actually decreased over the period by 1.6%.
Weak global demand has been a problem for China, which grew by 1.1%, the lowest quarterly rate since data collection began in 2010. This was lower than the forecast and previous quarterly growth rate – which were both 1.5%. The sharp decline in the stock markets at the beginning of 2016 has affected private consumption: Retail sales growth fell from 11.1% to 10.3% over the quarter and merchandise exports fell 9.6% year on year.
This report contains statistics data for markets around the world.