Most big economies grew in third quarter

Most of the major industrialised economies expanded in the third quarter.

The United Kingdom's is not one of them. On 23 October, the UK reported that its gross domestic product shrank 0.4 percent in the third quarter. This was much worse than economists' expectation of a 0.2 percent increase.

Last week's data, however, show that most of the other major industrialised economies grew in the third quarter.

In contrast to the UK, on 29 October, the United States provided a positive surprise for the third quarter, reporting a 0.9 percent increase, or 3.5 percent annualised. Economists had expected a growth rate of 3.2 percent. In the second quarter, the economy had contracted at an annualised rate of 0.7 percent. The economy's return to growth in the third quarter was marked by higher consumer spending, a slowdown in the reduction of inventories and an increase in residential investment.

It is likely that the euro area will also return to positive economic growth in the third quarter. The eurozone economy shrank by just 0.2 percent in the second quarter and economic indicators suggest that the economy has improved since then. For example, the European Commission's economic sentiment indicator has been rising steadily since hitting bottom in March this year and a report published on 29 October showed that it hit 86.2 in October, up from 82.8 in September.

Japan's economy returned to growth in the second quarter, increasing by 0.6 percent compared with the previous quarter, and the expansion is very likely to have continued in the third quarter. Data released on 29 October showed that industrial production increased by 1.4 percent in September, the seventh consecutive month of increase. Industrial production was 10.8 percent higher in the third quarter than the previous quarter.

While the major industrialised economies are making a gradual return to growth, some other economies have resumed growing at a blistering pace. For example, China had reported on 22 October that its economy grew 8.9 percent in the third quarter from the previous year. On 26 October, South Korea reported that its economy grew 2.9 percent in the third quarter from the previous quarter.

Fiscal stimulus is generally considered to have played an important part in the global economic improvement and there remain questions about how much growth can be sustained in the coming quarters.

Nevertheless, the return of most of the major industrialised nations to economic growth marks a good start to global economic recovery.