With the Federal Reserve set to announce its latest Interest Rate decision later this afternoon, investor attention will soon be turning towards US Gross Domestic Product which is due to be announced tomorrow. Whilst investors will invariably be looking for clues as to the actual direction of GDP movement, investors with an eye on the UK will be able to review the results of its Q1 GDP data later this morning.
Whilst final Quarter GDP data for 2010 showed an alarming decline of 0.5%; a figure attributed to the poor weather towards the end of the year; analysts expect today’s data to show a return to growth rather than a second Quarter of declines. Despite the many concerns which were voiced at the time, it seems unlikely that the UK will experience a ‘double dip;’ a term which implies two consecutive periods of sustained economic declines.
Today’s GDP report is forecast to show QoQ GDP growth of around 0.5%; a figure which would see annualised GDP gains of 2%. Whilst positive at first glance, investors should remain conscious of the fact that these gains would follow on from the considerable Q4 losses referenced above. Economic growth is undeniably a good thing at this time, but at the very least, the UK would need to record economic growth which is at least in line with expectations in order to return to the output levels recorded in Q3 of 2010.
UK GDP growth seems inevitable in the light of Q4 declines. Bear in mind though that gains of anything below 0.5% would mean that the UK has failed to reach Q3 output levels. Remember to review the figures in context upon their release.
UK GDP figures will be posted at 0830 GMT. To review the data release, visit the Office for National Statistics website by clicking here.
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