Investing.com - The latest measure of UK economic growth is due for release later this week, and Deutsche Bank (ETR:DBKGn) expects 2024 to have ended on a low, with the country’s gross domestic product to have contracted in the final quarter.
The UK is scheduled to release its first estimate of growth in the final quarter of 2024 on Thursday, and Deutsche Bank said a weak number is to be expected.
“We expect disappointing monthly GDP data to continue (0% m-o-m) in December, with services output flatlining, and manufacturing and construction activity both declining,” analysts at Deutsche Bank said, in a note dated Feb. 10.
“This will leave Q4-24 GDP shrinking – albeit marginally – coming in at -0.1% q-o-q,” resulting in annual GDP growth for 2024 of a much softer 0.7% – two-tenths below the bank’s official projections at the start of the year.
The German bank sees December GDP flatlining, dragged lower by weaker manufacturing and construction output as well as a stagnant services sector.
Looking ahead, downgrades to our 2025 GDP forecast are inevitable, the bank added.
“The weaker Q4-24 and Dec-24 GDP prints will result in a large negative carry over effect into 2025, pulling down on our 1.25% growth projection for this year. At minimum, the mechanical shift would lower our projection by 0.25pp for the current year.”
There’s more bad news too, as survey data to start the year have also yet to show any bounce back.
Downside risks to the bank’s Q1-25 GDP growth forecast (0.3% q-o-q) are rising with the latest PMI data pointing to only a modest rebound to start the year (0.1- 0.2% q-o-q).
The threat of a trade war looks stronger too, with recent newsflow pointing to both increases in tariffs on steel/aluminium as well as reciprocal tariffs.
“To be sure, trade uncertainty will remain for some time. We will re-evaluate our projections following the publication of the Q4-24 GDP report,” Deutsche Bank added.