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News Analysis: UK faces exports problem as it seeks broader economic recovery

English.news.cn   2014-04-10 07:43:21

LONDON, April 9 (Xinhua) -- Britain faces a problem with declining exports, economists said Wednesday.

British visible trade deficit narrowed slightly to 9.1 billion pounds (15.24 billion U.S. dollars) in February, according to figures from the Office for National Statistics (ONS), against 9.5 billion pounds in January.

Both imports and export trade value totals fell, with imports declining 2.2 percent month-on-month, about 700 million pounds. Exports decreased by 1.6 percent, about 400 million pounds.

"The February outturn casts further doubts on the rebalancing of the UK economy toward export-driven growth," Armela Mancellari, British economist with Barclays Economics Research, said in a note.

Continued weak growth in the Britain's largest trade partner the European Union (EU), resulted in a fall in EU-bound exports of 300 million pounds, high compared with the fall of exports to non-EU countries of 100 million pounds.

Import values from the EU increased by 300 million pounds, and import values from the rest of the world were driven down 1 billion pounds, mainly because of a fall in the imports of oil and erratics, in this case mostly aeroplanes.

Simon Wells, chief British economist with HSBC Global Research, said in an analysis that the improvement in the January trade figures over February figures had been driven by a fall in the value of imports, and primarily by imports of commodities as well as capital goods.

Wells added: "Given the strength of the recovery and its relatively import-intensive drivers, this does not look particularly likely to be sustained, underscoring the need for a pick-up in exports. There was little sign of such a pick-up in the February data."

If the decline in imports was reversed, it could result in a reversal of the fall in the trade figures over the coming months, said Wells.

"We have a relatively import-intensive recovery, led by consumption and, it is hoped, increasingly by investment. This being the case, we could well see the improvement being reversed in the coming months, if exports do not pick up," he said.

However, the prospects for the wider economy were given a boost with a fall in price pressures, which will continue to bolster lower inflationary pressures over the coming months and contribute to the domestic, consumption-led economic recovery continuing.

The decrease in import prices again in February, down by 4.9 percent year on year, would help towards this.

Mancellari said: "Declining import prices continue to feed through to input prices resulting in lower pressures for producers, and supporting our view that inflation is likely to be below the 2 percent Bank of England target in 2014."

Consumer price inflation (CPI) was 1.7 percent in March, driven down in recent months, said Mancellari, by a stronger sterling as well as generally benign global inflationary pressures. There are prospects this low rate could be maintained in the coming months, she added.

Editor: Yang Lina
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