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Economy in Brief

GDP Growth Moderates in 3 Countries, But Key Sectors Remain Firm
by Carol Stone May 26, 2004

GDP reported today for Q1 2004 in the UK, Spain and Malaysia showed slower growth than in the final quarter of 2003, but important segments of each of those economies still show signs of strength.

This was the second report of the UK data, and they were virtually unchanged from last month's preliminary figures. The newly released detail show the downshift in growth from 0.9% in Q4 to 0.6% in Q1 due to an outright decline in exports and a smaller gain in fixed capital formation. However, this latter item still had a quite respectable performance that lifted its four-quarter growth to 6.9%, the strongest since late 1998.

Total growth in Spain eased to 0.6% in Q1 from 0.7% the period before. Consumption by households and nonprofit institutions was the main source of the lesser advance. Capital formation actually strengthened, up 0.9% relative to 0.6% before; the machinery segment firmed from a sluggish 0.1% to 1.6% in Q1.

Growth in Malaysia had a bigger slowdown, to 0.8% from 2.7% in Q4. But the more remarkable aspect was the Q4 number, which was the highest since early 2000. So some consolidation was hardly surprising. An industrial breakdown of the data shows that most sectors had slower growth in Q1, and manufacturing activity fell by 0.9%. However, after its surge in Q4, the year-on-year pace in manufacturing sustained its huge 12%-plus Q4 amount.

So the lower growth rates in these countries in Q1 don't look to spell slowdown; they are more likely signals of desirable reversion toward underlying trends in these very diverse economies.

Qtr/Qtr (Seasonally Adjusted)4th Qtr/4th Qtr
GDP & Select Components, % Changes Year/ Year
1st Qtr 2004 4th Qtr 2003 3rd Qtr
 2003  
2003 2002 2001
UK - GDP, 2000 Pounds 0.6 0.9 0.8 3.0 2.7 1.9 1.9
    -  Fixed Capital Formation 1.1 2.4 1.9 6.9 3.7 5.3 -1.8
Spain - GDP, 1995 Euros 0.6 0.7 0.6 2.9 2.8 2.1 2.8
        -  Fixed Capital Formation 0.9 0.6 1.7 3.0 2.6 3.1 2.9
Malaysia - GDP, 1987 Ringgit 0.8 2.7 2.0 7.6 6.6 5.6 -0.5
            - Manufacturing -0.9 6.0 3.3 12.5 12.2 5.8 -6.4
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