GDP forecasts round-up October 2012: Temporary rebound in prospect

[T]he UK economy may be on course to return to growth in the third quarter, ending the double-dip recession and hopefully helping to revive business and consumer confidence. [...] However, it is likely that the underlying trend remains one of very weak growth, or even economic stagnation. [...] the rebound that we are seeing in the data now will of course also only be temporary.

• Economist David Blanchflower says (via Twitter), that the main GDP "concern is not Q3 which may well be positive but Q4 which is likely to be negative growth down 1.1% last 3qtrs where recession deniers now?"
• The British Chambers of Commerce (BCC) reports that its latest quarterly analysis of prospects for the manufacturing and services sectors suggests an economy in stagnation. Nonetheless, the BCC believes that next week's GDP data release from ONS will signal a return to growth: "The Q3 2012 results confirm that economic performance remains weak and inadequate. The official ONS assessment that the UK was in technical recession for three consecutive quarters is too gloomy. But it is clear that the economy has been stagnant for too long, and urgent measures are needed to enable businesses to drive a sustainable recovery. Though most key Q3 balances are weaker than in Q2, our results could still signal a return to positive GDP growth in Q3. This is because our Q2 survey pointed to a stronger economy than the ONS suggested."
• Ernst & Young ITEM Club says: "We still expect a substantial rebound in Q3, as the impact of the extra bank holiday unwinds. With a minor boost likely to come from hosting the Olympics, we should see growth more than offset any losses in Q2." Overall, it says that it "sees a return to growth in the second half of this year, leaving GDP down by 0.2% on the year." 
  
• The IMF estimates that the UK economy will contract by 0.4% in 2012, but grow by 1.1% in 2013.
  
• The Institute of Chartered Accountants in England and Wales (ICAEW) says that "the economy is set to contract in 2012 and growth will be subdued in 2013." The ICAEW says that "the economy is set to contract for 2012 as a whole, and looks likely to show only very weak growth next year. [We forecast] a 0.5% contraction in economic output for 2012 as a whole, followed by growth of just 0.9% in 2013."
• NIESR estimates that GDP grew by 0.8% in Q3 2012. It says: "Our monthly estimates of GDP suggest that output grew by 0.8 per cent in the three months ending in September after growth of 0.1 per cent in the three months ending in August 2012. This is the most robust rate of growth since the three months to July 2010. However, the strength of the figure for the three months to September is largely an artefact of special events.W NIESR defines these "special events" as follows: "the reversal of the negative effect from the additional bank holiday in June 2011 and the allocation of Olympics ticket sales from last year." However, NIESR warns that "economic growth is expected to be at a significantly slower pace in the coming quarters."
  
• The OECD has slashed its UK GDP forecast for 2012 from 0.5% to -0.7%. 
  
• The Olympics effect will result in the UK economy growing by 0.6% in Q3 2012, according to a Reuters poll of 50 economists. However, the economists believe that the economy will contract by 0.3% over the course of 2012 as a whole, before rebounding to show growth of 1.2% during 2013. It should be noted that each of these forecasts has been revised down from Reuters' August 2012 poll.

See also:

• XpertHR economic commentary October 2012: A lack of oomph 
  XpertHR's economic commentary for October 2012 report on the following topics: the national minimum wage uprating for 2012/2013; the Government's new strategy to reboot the UK economy and what might be expected from the Chancellor's Autumn Statement 2012. We also consider trends in trade union activity in 2012 and beyond, and report the latest readings on key economic indicators of relevance to HR practitioners and pay specialists, including inflation, unemployment and pay awards.