Economic growth at the turn of the year has been relatively weak. In the last quarter of 2002 the economy expanded by 0.4 per cent and, based on our estimates of monthly GDP, we anticipate growth of 0.3 per cent in the first quarter of this year. An important factor behind this weakness has been the poor performance of UK exports. Until recently, low export volumes were easily explained by the weakness of world trade. World trade volumes shrank throughout 2001, and have since increased only gradually. But, we estimate that the volume of world trade in goods, weighted using UK export market shares, is now close to its level at the end of 2000. In contrast, the volume of UK goods exports is currently around 7½ per cent below its peak level at the beginning of 2001. The loss of export market share was not evident until the second half of 2002 and comes after a period of remarkable stability in both the real exchange rate and export market share (chart 1). While it is possible that these observations can be attributed to temporary factors, they may instead indicate that the high level of the exchange rate since 1998, and the pressure this has put on exporters' profit margins, has left British exporters less able to cope with a sustained period of lower global demand. Data for the first two months of the year do not suggest that growth in export volumes in the first quarter of 2003 will be sufficient to regain the export market share lost towards the end of last year.