Transcript MR OLUTOYIN ALATISE SEX AND PHARMACEUTICALS THE

MR OLUTOYIN ALATISE
IS THE UK STILL IN RECCESSION?
WE DON’T THINK SO
22ND OF NOVEMBER 2009
IS THE UK STILL IN RECESSION?
 In the third quarter of 2009, the UK are still in the negative
growth of the recession which is -0.4%.
 This has been worrying the people in the UK especially the
consumer and the business confidence. This simply means if
the confidence is high the interest rate will also stay high, but if
the confidence is low, this will lead to unemployment and due
consumers spending less. This is one of the ways that the
recession could affect the country.
 The statistical institute has produced a graph which shows how
the US and the Eurozone have had a positive reading in the
third quarter of 2009 of 0.9% and 0.4% respectively, while the
UK is still in the negative of -0.4%.
IS THE UK STILL IN RECESSION?
 This also means that the UK is trailing behind other European
countries such as Germany and Spain as far as staying in the
positive zone is concerned.
 The graph below shows how the recession has been over the
past 12 years.
IS THE UK STILL IN RECESSION?
 The graph above shows the quarterly GDP(Gross Domestic Product)
of the UK and the EU. It’s clear that the UK the EU have relatively
on the same level over the last 25 years except for the early 1990’s
where the Eurozone were delayed by the German unification.
 During the period when the graph was produce their was debate on
the accuracy of this information. Therefore, with data provided by the
European Commission(Economic and Financial Affairs DG), a
survey was conducted for the economic sentiment indicator for the
UK and the EU since 1995. The results show the correlation that has
already been recognised by the GDP. Both UK and the EU were
positive for the second quarter.
IS THE UK STILL IN RECESSION?
 The graph below illustrates the economic sentiment indicator
for the UK and EU. As shown below, they are historically and
recently highly synchronized.
IS THE UK STILL IN RECESSION?
 The graphs above have left both the citizens of the UK and
Eurozone in an unsure position because the first graph states
that the UK once used to be in a better position until the year
2008 while the other graph shows that both the UK and the
Eurozone are slightly in the same position in terms of the
recession.
 One measure just how much we should rely on such surveys is
to include them in the statistical model for a “now-cast” of
quarterly GDP. It’s created to link the flow of timely
information and quarterly releases of GDP.
 In evaluation to the UK’s GDP numbers, a simple version of
this type of model was used. Using information available from
October 2009, the model predicts that third-quarter UK GDP
growth to be +0.15%. Unlike the GDP estimates, this models
predicts that the UK, is well on the way into positive field.
IS THE UK STILL IN RECESSION? (Conclusion)
 Is the UK still in the recession? The answer is still unknown
because the third quarter GDP flash estimates that the UK
should be careful as they are likely to return to the negative
growth unlike other advance economies.
 An accurate estimate of current economic conditions is
important to form a view of longer-term developments, but we
should be aware that the numbers produced by statistical
agencies are subject to estimate errors and that models that
include timely and higher frequency information are valuable
tools to form an informed opinion on “where are we now”.
 My personal opinion about this recession in the UK is that the
UK is still in the recession and very soon will be out of it and
the economy of our country will be back to what is was as of
September 2008.
BIBILOGRAPHY
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http://www.economicshelp.org/macroeconomics/economic-growth/causerecession2.html
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http://news.bbc.co.uk/1/hi/8321970.stm
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http://voxeu.org/index.php?q=node/4249
Reference
Buiter, Willem (2009) “Another quarter of negative GDP growth in the UK: situation
hopeless but not serious”, Financial Times Maverecon, 24 October.
Elena Angelini & Gonzalo Camba-Méndez & Domenico Giannone & Gerhard Rünstler &
Lucrezia Reichlin (2008), "Short-term forecasts of Eurozone GDP growth," Working
Paper Series 949, European Central Bank.
ECB (2008), “Short-term forecasting in the Eurozone,” Monthly Bulletin, April 2008, pp.
69–74.
Giannone, Domenico & Reichlin, Lucrezia & Simonelli, Saverio (2009), "Nowcasting
Eurozone Economic Activity in Real-Time: The Role of Confidence Indicator," National
Institute Economic Review, vol. 210, pp. 90 - 97.
Giannone, Domenico & Reichlin, Lucrezia & Small, David (2008), "Nowcasting: The realtime informational content of macroeconomic data," Journal of Monetary Economics,
Elsevier, vol. 55(4), pp. 665-676, May.