On the face of it, last week’s GDP figures were encouraging. After all, they indicated that the economy accelerated at the end of last year, and suggested that the post-referendum drop in the pound is starting to drive a strong performance in net exports. However, delving deeper into the data exposes some interesting developments, not all of which are positive.
On the one hand, there are some reasons to think that the downward revision to GDP growth in 2016 will be reversed in time. On the other hand, the boost to GDP growth in Q4 from net trade is not nearly as good as it looks and reflects temporary erratic factors. Nonetheless, the latest figures do little to alter our view that the economy will perform somewhat better than most expect this year.
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