UK leaves recession with fastest growth in 3 years, and other economics stories to read

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Kate Whiting, Senior Writer, Forum Agenda

• This weekly round-up brings you the latest news from the world of economics and finance.
• Top economy stories: UK emerges from recession; China’s trade returns to growth; Japan’s economy expected to shrink.

1. UK’s economy grows at fastest pace in 3 years

The UK has emerged from recession with its fastest economic growth in almost three years, as GDP increased by 0.6% in the first quarter of the year.

In March alone, GDP grew by 0.4%, exceeding the forecast of 0.1% from a Reuters poll of economists.

The country entered into a shallow recession in the second half of 2023, after experiencing one of the slowest recovery rates of the advanced economies from the effects of the COVID-19 pandemic.

Yael Selfin, Chief Economist at KPMG UK, told Reuters there was still uncertainty in the long-term outlook: “Despite the better near-term outlook, the improvement in GDP growth looks likely to be constrained by the ongoing weakness in productivity growth as well as reduced scope to increase employment levels.”

The UK follows the Eurozone, which was shown to have rebounded from recession at the end of April.

Meanwhile, the Bank of England is considering interest rate cuts as early as June. Governor Andrew Bailey suggested there could be more reductions than expected by investors.

2. China’s exports and imports return to growth

Trade has returned to growth in China, as customs data showed exports and imports rebounded in April after contracting in March.

Shipments from China increased by 1.5% last month, following a 7.5% decline in March. Imports rose by 8.4% in April, surpassing the expectations of economists polled by Reuters and reversing a decline in March.

Policy support measures in recent months may be stabilizing investor and consumer confidence, but analysts are uncertain whether this trade growth can be sustained.

“Export values returned to growth from contraction last month, but this was mainly due to a lower base for comparison,” Huang Zichun, China Economist at Capital Economics told Reuters.

“After accounting for changes in export prices and for seasonality, we estimate that export volumes remained broadly unchanged from March.”

3. News in brief: Stories on the economy from around the world

Japan’s economy is expected to have shrunk by 1.5% in Q1, due to a decline in all major drivers of growth, according to a Reuters poll of economists. As a result, the Bank of Japan’s plans to raise interest rates may be delayed.

It comes as figures showed consumer spending in Japan fell by 1.2% in March compared to a year earlier – marking the 13th consecutive monthly drop.

In March, Japan’s inflation-adjusted real wages dropped by 2.5% compared to the previous year. This marks the second consecutive year of decline, according to data from the labour ministry.

Peru’s poverty rate increased last year, with almost a third (29%) of the population now classified as impoverished. This rise, up 1.5% from the previous year, marks the second consecutive annual increase and is disproportionately represented in rural areas.

The number of Americans filing new claims for unemployment benefits increased the week commencing 29 April to the highest level in over eight months, indicating the labour market is cooling.

Online retail sales in the US grew by around 7% from January to April this year, Reuters reports. This growth was fuelled by a high demand for groceries and more affordable discretionary items, according to Adobe Analytics.

Business activity in the eurozone increased significantly in April, reaching its highest pace in nearly a year. This growth was driven by a strong rebound in the services industry, which outweighed a decline in manufacturing, a survey found.

Indonesia’s economy grew by 5.11% year-on-year in the first quarter, its highest growth rate for three quarters.

4. More on finance and the economy from Agenda

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In June 2023, the World Bank established a $25-a-day threshold for prosperity. Globally, most people do not meet that threshold – but the data is moving in the right direction. Here are four key data points we all need to understand about the state of world prosperity.

Businesses are sometimes accused of creating poverty, but they can also play a crucial role in helping to alleviate it. Recent research shows there are five key drivers organizations can use to help tackle poverty around the world.