The AUD GBP exchange rate was lower on Wednesday in a day driven by GDP figures. Australia’s results for the third quarter were better than expected, but still showed a loss from the recent lockdowns. The OECD has also upped its forecasts for UK growth and expects the country to outperform the rest of the G7 in 2021 and 2022.
The AUD GBP exchange rate was trading around 0.5350 after of the latest figures.
Australian slowdown better than previous forecasts
Australia’s GDP contraction caused by the latest lockdown was shown to be less severe than expected as increased public spending and healthy trade surplus cushioned a heavy drop in household spending.
The September quarter national accounts showed gross domestic product falling 1.9% compared with the previous three months, according to the Australian Bureau of Statistics.
The figures surprised economists who had tipped a 2.5%-3% contraction. On an annualized basis, the economy expanded at a 3.9% clip.
The latest quarterly contraction was still the third largest since records began over 60 years ago. The worst fall was recorded at 7% during the 2020 June quarter when the first lockdowns occurred.
“Given the backdrop of lockdowns in NSW, Victoria and the ACT, this is an impressively strong performance,” said Sarah Hunter, chief Australia economist for BIS Oxford Economics.
“This outcome highlights that once restrictions are eased and the virus is under control (either through low case numbers or high vaccination rates), the economy can recover rapidly,” Hunter said.
“This finding is increasingly being confirmed by the labour market and retail spending data, and it’s likely that there will be a sharp turnaround in GDP in the December quarter,” she added.
UK ‘living’ with high virus case surge, OECD boosts growth outlook
The OECD has tipped the UK economy to outperform the other G7 countries in this year and next.
However, the country is grappling with cases at close to 50,000 in a single day. The UK has logged over 48,000 new cases in the latest 24-hour period and there is still a risk of Christmas restrictions if that tally continues to grow. The country’s health authorities have said they have 32 confirmed cases of the latest variant, 22 of those are in England and 10 are in Scotland.
The rise in virus cases is a risk to the growth picture, but the OECD also marked supply chains and inflation as other risks. Luckily for the pound sterling these issues are affecting other countries.
The UK economy will expand 6.9% this year, 0.2% higher than previously expected, according to the latest forecasts. The UK is also tipped to top the G7 table next year at 4.7% growth.
The OECD has downgrades its outlook for the global economy, with Mathias Cormann, secretary general of the group, saying: “The strong rebound we have seen is now easing and supply bottlenecks, rising inflation, and the continuing impact of the pandemic are clouding the horizon.”
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