According to recent reports, the UK trade deficit shrank down to 7.8 billion pounds, 0.4 billion less than the 8.2 billion deficit recorded in July, and 10 billion less than the forecasted trade deficit of 8.8 billion.
Analysts believe that there is an obvious correlation between the drop in the trade deficit and the rise in UK exports and simultaneous drop in imports. The nation’s exports rose by 0.6% in July, totaling 25.5 billion pounds, while imports dropped 0.7% to 33.3 billion pounds. If UK markets can continue to limit their dependency on foreign imports, while also selling more exports, they may be able to minimise the projected economic downturn.
In addition to the number of exports being sold, the value of UK exports also rose 1.3% up to 25.5 billion pounds, the highest this figure has been since such statistical records began 13 years ago, in 1998. Because the value of exports rose, the offset muted gains caused by the rising value of imports, which also rose just 0.3% up to 42.6 billion pounds.
Despite recent reports indicating that UK could experienced a slower than projected economic growth rate during the next 12 months, some economists have recently stated that the shrinking trade deficit and rising value of UK exports were the primary reasons why reports issued from July through September were more optimistic.
However, as economic uncertainty still plagues the debt laden eurozone, and the effects of the global financial crisis remain strong, analysts have recently revised their opinion on economic growth, stating that the current outlook is still “fraught with risks.” Although exports have seemed to be a light at the end of the tunnel, as the global economic outlook continues to worsen, the prospect of UK trade fending off a recession becomes increasingly less likely.
