In an sudden flip, the UK’s GDP has shrunk by 0.3%. The month-to-month estimates revealed by the Office of National Statistics reveal an MoM change of -0.3% in August. The GDP was anticipated to be at 0% MoM change. The worse-than-expected GDP is growing the worry of recession within the economic system.
The GDP within the month of July confirmed a progress of 0.1%.
The manufacturing knowledge additionally confirmed a unfavourable decline of 1.6% whereas the manufacturing knowledge confirmed a decline of 1.8%. These numbers will certainly improve the fears of a slowdown within the economic system.
Why UK GDP Numbers Matter
The international economic system is at the moment in an especially fragile state. The central banks of main economies have engaged in rate of interest hikes and quantitative tightening to curb inflation levels within the economic system. For instance, the US Federal Reserve has raised rates of interest 4 consecutive occasions by an unusually giant 75 bps. A fifth 75 bps hike can be extraordinarily doubtless.
Similarly, the Bank of England additionally elevated rates of interest to curb the inflation stage.
However, the hawkish stance of the central banks has posed a menace to international monetary stability. The World Bank acknowledged that the worldwide economic system can face a serious recession in 2023. Similarly, the United Nations has warned the central banks to pivot. Major companies reminiscent of FedEx have warned that the demand slowdown has accelerated.
The restrictive financial coverage has had different main drawbacks. The world’s richest man Elon Musk claims that the hawkish stance of the Fed will result in deflation. Cathie Wood of Ark Invests has written an open letter to the Fed supporting Musk’s perspective.
Neel Kashkari, the President of the Minnesota Fed, admitted that the financial situation seems like stagflation.
Will There Be A Recession
The US economic system has already witnessed two consecutive quarters of unfavourable progress. This meets the technical standards of a recession. However, the US administration has declined any chance of a recession.
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