How bad was first-quarter GDP growth?

The latest consensus forecast still puts first-quarter GDP growth as high as 1.8%

annualised, whereas our own calculations suggest it was no higher than 1.0%.

(See Chart below.) Furthermore, despite the higher consensus, we believe that

the risks to our own estimate lie mainly on the downside and we can't

completely rule out an actual

in GDP. Consumption growth slowed to as

low as 1%, business investment may have shrunk and net external trade was

possibly a sizeable drag on overall GDP, as real imports rebounded sharply.

Growth should pick up again in the second quarter, particularly if energy prices

drop back, although a lot depends on how much fiscal tightening is eventually

implemented.