Our UK exports forecast is normally built up using two key assumptions: demand growth in the markets that the UK exports to, and the share of that demand met by UK exporters. To estimate the direct impact of global economic conditions on UK exports, we start by forecasting world GDP growth, which informs prospects for world trade growth, in turn allowing us to forecast UK export markets growth. In our March 2022 forecast, following the Russian invasion of Ukraine, we did not produce a UK export market forecast, as post-invasion IMF world forecasts were not available in time.
As well as this direct effect, global financial market conditions can affect the UK economy indirectly, for example through broad confidence channels. To some extent, these effects are factored in via ‘conditioning assumptions’ for financial market variables. We also make further adjustments to our forecast if we judge them to be sufficiently material.