Covid-19: GDP sees record rebound in third quarter

Ruben Fields
November 12, 2020

The fifth largest economy in the world is set to contract for the second consecutive quarter, dragging the country into an unprecedented recession, according to a forecast by the Indian national central bank.

The UK GDP monthly release showed that the UK economy expanded less-than-expected in September, arriving at 1.1% versus 1.5% expected and 2.1% previous.

Gross domestic product (GDP) shrunk 8.6 per cent in the quarter ending in September, the Reserve Bank of India said after reviewing high-frequency data to gauge economic activity.

"The steps we've had to take since to halt the spread of the virus mean growth has likely slowed further since then".

The government has responded to the fresh curbs, announcing that its generous salary support scheme, which sees it paying 80% of the salaries of workers retained by firms rather than fired, will be extended through March.

Jonathan Athow, ONS deputy national statistician for economic statistics, said that all main sectors of the economy continued to recover in September.

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With England's second national lockdown, and tougher Covid measures across the rest of the United Kingdom, experts are forecasting a sharp fall in GDP across November prompting fears of a double-dip recession.

Britain plunged into a historic downturn after imposing a lockdown on 23 March that lasted until mid-June.

The unemployment rate meanwhile jumped to 4.8% in the third quarter as the pandemic destroyed a record number of jobs.

And the worry is that the economy will shrink again in the fourth quarter of the year after the resurgence of the virus led to fresh curbs on everyday life across the U.K. England, for example, is in the midst of a four-week lockdown until December 2.

BoE governor Andrew Bailey on Thursday described the vaccine announcement as "encouraging". It's mostly consistent with what we had forecast but it's encouraging.

Laith Khalaf, analyst at stockbroker AJ Bell, said "the real litmus test for the economy going forward is how soon it can return to pre-pandemic levels". The team of authors also used a range of indicators from vehicle sales to flush banking liquidity to signal brightening prospects for October. September enjoyed the remaining fruits of the Eat Out To Help Out scheme, which undoubtedly provided some buoyancy to economic growth.

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