The UK has successfully navigated its way out of a recession, with the gross domestic product expanding by 0.6% in the first quarter, according to official figures released on Friday.
What Happened: The Office for National Statistics revealed that the UK’s GDP grew by 0.6% in the first quarter of 2024, marking the end of a mild recession that began in the second half of 2023. The UK’s production sector saw an expansion of 0.8% during this period, while construction experienced a 0.9% decline.
On a monthly basis, the economy grew by 0.4% in March, following a 0.2% expansion in February. The Bank of England’s Monetary Policy Committee has kept its main interest rate at 5.25% due to elevated indicators of persistent inflation.
Renowned economist Mohamed A. El-Erian, Chief Advisor at Allianz, emphasized the need for sustainable growth in light of the UK’s exit from the technical recession. He stated, “The UK is no longer in a technical recession. GDP grew by 0.6% in the first quarter, exiting the mild July-December contraction. Having said that, the economy's growth dynamics remain too timid — this after what already has been too long a period of growth that is insufficiently robust and insufficiently inclusive/sustainable.”
Why It Matters: The UK’s exit from recession comes at a time when global economic concerns are on the rise. In the U.S., for instance, there are warning signs of a possible recession, with the Economic Cycle Research Institute’s Leading Economic Index showing a downward trend. This has raised concerns about the vulnerability of the U.S. economy to shocks.
Meanwhile, the Federal Reserve’s potential monetary easing through interest rate cuts could lead to a stock market “melt-up,” potentially propelling the S&P 500 to record highs by the year’s end, according to investment strategist Ed Yardeni.
Earlier in the year, a survey revealed that only 25% of experts predict a U.S. recession in 2024, with potential triggers being external factors such as a conflict involving China, rather than domestic economic issues like increased interest rates.
Before the UK’s recent GDP growth, the country’s economy had officially entered a recession, raising concerns for Prime Minister Rishi Sunak as he prepared for an upcoming election.
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This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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