OPEC Monthly Oil Market Report – November 2017
The underlying positive momentum has led to an upward revision in the 2017
forecast for the
Euro-zone, which now stands at 2.3%, compared with 2.2% in the previous month. Consequently, the 2018
GDP growth forecast was lifted to 2.1%, compared to the previous month’s estimate of 1.9%. Political
uncertainties, Brexit procedures, as well as monetary policies remain important factors to monitor.
Despite the sixth round of
negotiations, the progress made since the initiation of the so-called Article
50, which kicked off the 2-year Brexit negotiation period, has been limited. A major question is the level of
the break-up cost that the EU is requesting the UK to fund. This is estimated at around €60 bn. It now
appears that the UK is offering less than a half of this amount, which will make further progress in the
negotiations very challenging. Moreover, the discussion of the Ireland-Northern Ireland border has re-
emerged, yet another complicated topic in the negotiations. In the meantime, economic activity continues to
slow down, but seems to have stabilised to some extent. Some parts of the economy continue to do very
well, particularly the export-oriented industries that benefit from the low pound.
After both quarters in the 1H17 have now been confirmed to have grown by only 0.3% q-o-q SA, growth in
3Q17 has picked up to 0.4% q-o-q SA. Changes in household expenditure were reported at a low level of
only 0.2% q-o-q growth, the lowest level in almost three years, while investment has picked up, to rise by
0.6% q-o-q SA, albeit from very low levels. The unemployment rate remained surprisingly low, falling to 4.2%
in July, from 4.3% in June and 4.4% in May. Wage growth continued at a relatively solid level of 2.2% y-o-y
in August, compared with a low level of 1.6% y-o-y in July. As inflation remained high at 3.0% y-o-y in
September, the Bank of England raised its key-policy rate for the first time in more than 10 years, by 25 bp in
its latest meeting in November. At the same time, it voiced concern about the relatively high debt levels of
private households in the UK, as interest rates may go up further in the near future.
In connection to most recent economic developments, the
for manufacturing picked up again, pointing at
a continued positive trend to rise to 56.3 in October, compared with 55.9 a month earlier. The very important
services sector, which constitutes the majority of the UK’s economy, rose even more considerably to 55.6 in
October, compared with 53.6 in September and 53.2 in August.
Graph 3 - 7: UK inflation
Graph 3 - 8: UK PMIs
With indicators pointing to a gradual slowdown in the UK economy, a trend that has already been reflected in
the GDP growth forecast numbers, the
forecast remains unchanged at 1.5% for 2017. Growth
in 2018 is forecast at 1.4%.
Sources: Office for National Statistics and Haver Analytics.
% change y-o-y
Sources: CIPS, IHS Markit and Haver Analytics.