Business investment and exports set to pick up

The business group has raised its growth forecasts for 2013 and 2014 and expects growth to gather pace in 2015 as the recovery continues to build. Business investment and net trade are also expected to provide increasing support to growth over the coming years. Unveiling its latest economic forecast, the CBI is forecasting GDP growth of 1.4% in 2013, up from 1.2% in its August forecast, after better than expected GDP growth in the third quarter and following signs of a pick-up in confidence across a broad range of sectors, including manufacturing. John Cridland, CBI Director-General, said: "The recovery that started in the service sector has fanned out to manufacturing and construction, and is shaping up to be more broad-based. The recovery won't be spectacular, just slow and steady, but appears more solid and better-rooted." Quarter-on-quarter growth is expected to soften in the final quarter of 2013 (0.5%), in part reflecting some volatility in the trade and investment data. In 2014 and 2015, the CBI expects the recovery to gather pace, forecasting 2.4% GDP growth in 2014 (up slightly from 2.3% in August), rising to 2.6% growth in 2015, with domestic demand supported by increases in business and housing investment and household disposable income. Meanwhile, business investment and exports are forecast to gradually strengthen. Business investment growth is forecast to improve from -4.9% in 2013 to 6.9% in 2014 and 8.3% in 2015. Export growth is expected to increase from 1.3% in 2013 to 3.6% in 2014 and 5.1% in 2015, and the net contribution of trade to GDP growth will increase slightly, though remain relatively muted as domestic demand boosts import growth from 0.3% in 2013 to 2.2% in 2014 and 4.2% in 2015.