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It is always a mistake to read too much into short term data such as quarterly GDP statistics. If the data is preliminary it is an even bigger error.
Sadly it was no surprise when pundits spent a lot time pontificating about today’s announcement of a 0.1% rise in GDP in the final quarter of 2009. To be sure it was of symbolic significance, after six consecutive quarters of falling output, but it says little about the trend.
The estimate could easily be revised by 0.1 or even 0.2 percentage points either way
For a start the preliminary figure could easily be revised. The estimate could easily be revised by 0.1 or even 0.2 percentage points either way. If there was a significant fall it would mean Britain has not yet escaped from a technical recession after all. (article continues below)
Perhaps more interesting are the latest forecasts from the International Monetary Fund (IMF)—although forecasting has its pitfalls too. The IMF estimates that Britain’s GDP fell by 4.8% while it is forecasting a rise of 1.3% this year. (article continues below)
The key question is whether Britain can generate strong and consistent growth over the long term. This depends on a radical restructuring of the productive economy. Short term stimulus packages cannot produce an economic revival.
