GDP pessimism as growth takes a dive

ECONOMISTS have slashed their forecasts for 2018 GDP as figures due out tomorrow are expected to show growth slowed in October.

Peter Dixon, Commerzbank’s global financial economist, said GDP growth fell sharply to 0.4 per cent – down from 0.6 per cent in the previous three months.

NatWest’s Ross Walker now projects that in 2018 the economy will expand by just 1.2 per cent. This is well below the 2017 figure of 1.7 per cent.

A key industry survey published this week – the Services Purchasing Managers’ Index – showed the weakest order books since summer 2016. Andrew Wishart, of analysts Capital Economics, says this shows that ‘in November the economy did lose some underlying momentum’.

Dixon said ‘companies are meeting demand by running down inventories’ by selling existing stock rather than producing. He blames slowing global growth and international trade tensions stemming from President Trump’s clash with China.

Experts expect the economy to grow faster next year because the Chancellor’s Budget last month was more generous than expected.

Walker said he has now raised NatWest’s forecast for 2019 from 1.6 per cent to 1.9 per cent. He added: ‘It sounds good, but it’s just in line with the long-term average.’