In response to the preliminary Q4 2012 GDP figures out today, John Hawksworth, PwC’s chief economist, said:
"Today's GDP growth estimate of -0.3% in Q4 2012 was a little disappointing, but excluding the reversal of the Olympics-related boost to growth in Q3, it still indicates a broadly flat underlying trend in the economy.
“These are only preliminary estimates, however, and could be subject to later upward revision given that recent employment data, in particular, remain much stronger and the implied fall in productivity growth over the past 18 months looks implausibly large. The apparent stagnation in 2012 also reflects particular weakness in North Sea oil and gas output (causing an 11% fall last year in the mining and quarrying sector of which it forms the largest part) and the construction sector (down over 9% last year), which we would not expect to be repeated to the same extent in 2013. Recent international data has also been somewhat more cheery, with China picking up in the fourth quarter, the US avoiding going over the fiscal cliff, and the eurozone crisis calming down a bit even if underlying problems there remain serious. This has helped to support a recent rally in world stock markets, suggesting a gradual return to cautious optimism about global prospects.
“Taking all of this into account, our main scenario is that the UK economy will continue to have a bumpy ride in 2013, but should narrowly avoid a 'triple dip' recession with average growth in the year as a whole of just over 1%. This kind of modest and uneven growth may be the 'new normal' for some years to come, but we should not exaggerate the significance of today's preliminary GDP data."
PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See pwc.com for more information.