UK's GDP growth rate remains at 0.5%; IMF cautions about global growth
Despite prevailing concerns about global economy, the UK's GDP growth rate remained unchanged at 0.5 percent for the fourth quarter of 2015. Services sector added the most to the GDP growth. This comes close on the heels of warning by International Monetary Fund (IMF) about weakening global growth. IMF has called for national governments to focus on spending to push growth.
Ahead of G20 meeting scheduled to be held on Friday and Saturday in Shanghai, IMF has asked nations to step up public spending to spur economic growth. IMF advised that instead of austerity, government spending will be helpful in propelling growth after a series of downgrades to GDP expectations in 2016.
Sky NEWS reports that UK's GDP growth rate of 0.5 percent during October-December 2015 quarter indicated surge in economic activity from the previous quarter. The UK economy recorded a 2.2 percent growth rate for whole 2015 as against 2.9 percent growth rate in 2014, according to the latest data from The Office for National Statistics (ONS).
The ONS data further revealed that the services segment contributed the most to the GDP. The services segment offset the impact of tough quarter for the construction and production sectors. The year 2015 was dreadful and volatile for financial markets as stocks went up and down moving in tandem with oil prices.
IMF advised countries with cash reserves to go for higher spending to boost economy growth. This will cool down the financial markets and bolster investor confidence, opines IMF.
IM, in its Article IV consultation with the United Kingdom, has stated that the unemployment rate fell to 5.1 percent in late 2015. Private domestic demand is boosting the UK economy, which is growing steadily. IMF forecasts 2.2 percent GDP growth rate for medium-term. Inflation rate was 0.3 percent in January 206 and may rise gradually, according to IMF (International Monetary Fund).
Vicky Redwood, chief UK economist at Capital Economics, said "The fact that quarterly UK GDP growth was left unrevised at 0.5 percent was expected. But, nonetheless comes as a bit of a relief given the jitters about the global recovery at the moment."
The slump in commodities market gone beyond the slowdown in China and this is reflecting global growth concerns. Central banks such as European Central Bank (ECB) have introduced negative interest rates in an attempt to stoke inflation.
Meanwhile, European markets witnessed rally despite continuous fall in oil prices. The UK and other European markets shrugged off China's economic slowdown, concerns about global growth and volatility in commodities market.
FTSE100 index rose 2.48 percent to 6,012.81 points. Germany''s DAX gained 1.79 percent; France's Cac added 2.24 percent; Italy's FTSE MIB was up 2.3 percent; Spain's Ibex rose 2.52 percent; and Greece's Athens market gained 2.05 percent. Wall Street's Dow Jones Industrial Average was marginally up 0.3 percent, as reported by The Guardian.
Chinese officials are in the process of assuring investors and financial markets that there wouldn't be any measure to devalue Yuan against the US dollar. China was noted to have devalued its currency last August to boost exports.