Provisional Estimates of the Office for National Statistics National Income and Quarterly GDP Estimates for the 12 Months Ending March The fourth quarter paints a picture of an economy that maintained momentum last year despite headwinds. GDP is estimated to have expanded by 6.1% in the January-March quarter, helping to push full-year growth slightly higher than the projected 7.2% pace. The gross value-added numbers for the fourth quarter point to a broad-based uptick in growth from the previous three months, with the umbrella utility services sector (including electricity, gas and water supply) and the all-encompassing services category of business, hotels, transportation Together. Communications and broadcasting are the only two of the eight GVA sectors to be showing a decline in expansion. While construction led cross-sectoral growth, expanding by 10.4%, the services sectors collectively posted 9.1% growth with trade, hotels and transportation, despite a deceleration from the third quarter’s 9.6% pace. The sector, which accounts for the largest share in GVA, has shown a healthy growth of 13.1% sequentially as travel demand picked up in the wake of COVID-19 fears. Manufacturing was also a silver lining, rebounding from the December quarter’s contraction to register a 4.5% expansion. And sequentially, manufacturing GVA grew 20.4% from the third quarter, reflecting the continued expansion reported in recent months by S&P Global’s survey-based purchasing managers’ index.
In fact, the latest PMI readings show factory orders rising in May at the fastest pace since January 2021, a welcome sign and a welcome sign for an economy reeling from a global economic slowdown and heightened uncertainty this year. There is a buffer, which also includes financial growth. Sector Risk. NSO data also pointed to gross fixed capital formation, a proxy for investment activity, having strengthened again in the fourth quarter. GFCF grew a healthy 8.9% year-on-year, and an even stronger 20.8% sequentially, largely aided by the government’s capital expenditure on infrastructure and other big-ticket public works. The recovery in investment expenditure bodes well for the outlook for this year, given its overall multiplier effect and job creation potential. To be sure, the same GDP data also underlines the fact that private consumption spending – a major force of demand – is yet to gain a firm footing. Private consumption expenditure is actually estimated to have contracted 3.2% in the March quarter from the previous period, with its share in GDP shrinking to at least an eight-quarter low of 55%. With El Nino almost certain due to a possible rain deficit, the outlook for agricultural production and related rural spending is also now in doubt. Therefore, policymakers should ensure that fiscal and monetary measures remain growth-supportive in the coming quarters.