Our UK exports forecast is built up using two key assumptions: demand growth in the markets the UK exports to and the share of that demand met by UK exporters. So, 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, which in turn allows us to forecast UK export markets growth.
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 could also make further adjustments to our forecast to reflect expected effects if we judged them to be sufficiently material.