Wednesday, October 09, 2013

Growth estimates and the IMF

This might be the most tedious title of any post here, but the recent IMF upgrade in growth estimates for the UK set off a thought process.
The forecast for UK growth this year received a significant upgrade to 1.4%, up from July's estimate of 0.9%.
Here's the thing: UK GDP grew 0.4% in Q1 2013 and 0.7% in Q2 2013 (Q2 figures may be upgraded further). In other words, when the IMF predicted total growth in 2013 to be 0.9%, the UK had already exceeded that figure, in the first half of the year. So, they upgraded their estimates. But they only upgraded them so far as to predict 0.4% growth for the two remaining quarters combined.

The evidence we have for Q3 is that growth was substantially quicker than in Q2: services, manufacturing and construction PMI figures have basically gone gangbusters for July, August and September. The BCC is predicting Q3 growth of up to 1%. By my reckoning that would make growth of roughly 2% in the first three quarters. Given that all the figures I've seen are obviously available to the IMF, what do they know that we don't?


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