Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The UK economy has returned to growth as the economic damage caused by the Omicron variant faded.
UK GDP grew by 0.8% in January, faster than economists expected, after contracting 0.2% in December when ‘Plan B’ restrictions were introduced after the fast-spreading Covid-19 variant emerged.
New figures from the Office for National Statistics show that every sector grew in January, with services up 0.8%, production up 0.7% and building up by 1.1%.
Customer-facing services companies saw a strong pick-up. The food and drink sector grew 6.8% in January, after the festive season was badly disrupted as parties were canceled and more people worked from home in December.
January’s rebound means the UK economy was 0.8% above its pre-pandemic levels:
However, Russia’s invasion of Ukraine is now threatening the recovery, with the International Monetary Fund likely to cut its global growth forecasts.
Managing director Kristalina Georgieva told reporters last night that the unprecedented sanctions imposed on Russia are pushing the Russian economy into a deep recession.
The crisis is also causing spillovers globally: driving up commodity prices, leading to higher inflation which hits real incomes, and damaging financial conditions and business confidence.
So to sum it up, we have tragic impact of the war on Ukraine. We have contraction on a significant basis in Russia. And we see the likely impact on our World Economic Outlook. We will come up with, next month, a downward revision of our growth projections.
So we got through a crisis like no other with the pandemic. And we are now in an even more shocking territory. The unthinkable happened—we have a war in Europe.
In January, the IMF forecast the world economy would grow by 4.4% this year, down from 5.9% in 2021.
US president Joe Biden is expected to ratchet up the economic pressure on Vladimir Putin later today by calling for the end of normal trade relations with Russia, according to reports.
The move, reported by Reuters and Bloomberg citing anonymous Biden administration sources, would clear the way for increased tariffs on Russian imports and comes on top of widespread sanctions and the decision this week to ban oil imports from Russia by the US and UK.
- 7am GMT: UK GDP and trade report for January
- Noon GMT: Brazil’s inflation rate for February
- 3pm GMT: University of Michigan survey of US consumer sentiment for March
George is Digismak’s reported cum editor with 13 years of experience in Journalism