UK January GDP Turns Positive... Exiting Technical Recession to Growth Trend

0.2% Increase... Expansion of the Service Sector

The United Kingdom's gross domestic product (GDP) growth rate for January this year recorded 0.2%, marking a return to growth for the UK economy, which had entered a technical recession.

According to Bloomberg and other sources on the 13th (local time), the UK Office for National Statistics announced that the UK's GDP growth rate for January was 0.2%. The UK economy, which had recorded negative growth rates for two consecutive quarters with -0.1% in Q3 and -0.3% in Q4 last year, turned positive in January this year.

[Image source=Reuters Yonhap News]

Foreign media evaluated that the service sector, which grew by 0.2% in January, contributed the most to the growth trend. The UK Office for National Statistics stated that strong growth in wholesale and retail trade led the increase, and housing construction also showed favorable performance. The TV, film, and pharmaceutical sectors were described as sluggish.

If the UK's GDP continues to grow in February and March, it will escape the recession. GDP for the recent three months from November last year to January this year decreased by 0.1% compared to the previous three months. The Bank of England (BOE) forecasts the UK's growth rate this year at 0.25%, while the Office for Budget Responsibility (OBR) recently predicted 0.8% growth.

Jack Meaning, Barclays' chief UK economist, said, "It's not a very positive picture, but it is clearly an improvement compared to the end of last year," adding, "The situation looks good for now, but we need to observe whether this trend will continue." James Smith, an ING economist, said, "The figures align with expectations that activity will gradually recover over the coming months," and forecast that the technical recession experienced in Q4 last year is unlikely to repeat in Q1 this year.

Meanwhile, if the UK economy fully returns to growth, it could be a boon for Prime Minister Rishi Sunak's Conservative Party, which is trailing the main opposition Labour Party by a large margin in opinion polls ahead of this year's general election. Chancellor of the Exchequer Jeremy Hunt, in a statement following the GDP announcement, said, "It has been a difficult few years, but today's figures show progress in economic growth."