Britain’s trade deficit narrowed more than economists forecast in April as imports declined faster than exports.
The goods trade gap was at 8.2 billion pounds ($12.8 billion) compared with 9.2 billion pounds in March, the Office for National Statistics said today in London. The median forecast in a Bloomberg News survey of 19 economists was for 8.8 billion pounds. Exports fell 1.4 percent and imports declined 3.8 percent.
While data this week show the economy is gaining momentum, today’s figures underline the risks to the recovery from a recession-stricken euro zone, Britain’s biggest trading partner. Exports to the bloc fell 2.3 percent to their lowest level since February 2011. Net trade acted as a drag on economic growth in the first quarter.
“It seems unlikely that net trade can significantly help the U.K. economy in the near term given current ongoing weak domestic demand in the euro zone and moderate and stuttering global growth,” said Howard Archer, an economist at IHS Global Insight in London. “The hope is that the overall marked weakening of the pound earlier in 2013 will increasingly feed through to boost exports and the beneficial impact of this is reinforced by global growth gradually improving.”
Exports to the European Union as a whole fell 3 percent. The decline was partially offset by a 0.2 percent rise in shipments to countries outside the bloc.
The surplus on trade in services narrowed to 5.6 billion pounds in April, leaving the overall trade deficit at 2.6 billion pounds compared with a gap of 3.2 billion pounds a month earlier, the ONS said.
European Central Bank President Mario Draghi said yesterday that the euro-area economy will return to growth by the end of the year, handing policy makers a reason to hold back fresh stimulus. The ECB kept its benchmark rate unchanged in Frankfurt. The same day, the Bank of England’s Monetary Policy Committee kept its bond-purchase program at 375 billion pounds and the benchmark interest rate at a record-low 0.5 percent.
The U.K. returned to growth in the first three months of the year with expansion of 0.3 percent, and the BOE forecasts 0.5 percent growth in the current quarter. Measures of services and manufacturing were at the highest in 14 months in May.
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