Weak exports weigh on GDP growth hopes

Tim Wallace
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ECONOMISTS have warned that weak international sales are dragging down the UK’s economic growth, as official figures yesterday revealed falling goods exports in February.

The trade deficit rose for the second consecutive month, up £0.9bn to £3.4bn, driven by falling goods exports to non-EU countries.

Furthermore, January’s deficit was revised up from £1.8bn in initial estimates to £2.5bn.

The goods deficit with EU countries fell £0.4bn to £3.8bn in February, while the deficit with non-EU countries rose from £3.7bn to £5bn.

Car exports led the drop, falling £0.3bn to non EU countries including the US, Russia and China, and £0.2bn to EU countries.

Chemicals exports offset some of those losses, rising £0.2bn, and oil exports rose £0.1bn, largely to France and the Netherlands.

Goods imports were almost unchanged, with a £0.2bn rise in oil imports offset by a £0.2bn drop in intermediates,

Services trade held steady with a surplus of £5.4bn in February.

“These disappointing figures suggest that net trade’s positive contribution to GDP growth in the final quarter of last year is likely to have been a one-off,” said Vicky Redwood from Capital Economics.

“Barring a sharp narrowing in March, the deficit in the quarter as a whole will be about £2bn bigger than the £7bn recorded in the fourth quarter of 2012, equivalent to about 0.5 per cent of quarterly GDP.”

“Accordingly, it looks as though net trade was a drag on GDP growth in the first quarter.”