Would You like a feature Interview?
All Interviews are 100% FREE of Charge
The International Monetary Fund (IMF) has warned that the UK remains the second slowest-growing economy among the G7, despite a “significant upward revision” to its growth projections.
In its latest forecast released on Tuesday, the IMF said growth in the UK would slow to 0.4% in 2023 from 4.1% in 2022, before rising to 1.0% in 2024.
The update represents a 0.7 percentage point revision from the IMF’s previous forecast that the UK economy would contract by 0.3% in April this year.
Ensuring economic growth is one of five promises the government aims to deliver this year, along with halving inflation, reducing debt, reducing NHS waiting lists and ending small boat crossings.
The government has made some progress on its pledge to curb inflation after inflation unexpectedly fell to 7.9% in June, after market expectations had hit 8.2%.
The IMF said the improvement in the UK’s economic outlook was largely due to “better than expected consumption and investment due to the confidence effect of lower energy prices”.
He said the Windsor Framework Agreement, which was signed in February this year, has “reduced post-Brexit uncertainty” and boosted market confidence, further improving the situation with “financial sector resilience”.
“Energy and food prices have fallen significantly from their 2022 peaks, although food prices remain elevated on rising gas inventories in Europe and weaker-than-expected demand in China,” it added.
The latest update makes Germany the only country whose economy is expected to contract this year, with production projected to fall by 0.3%, meaning it has moved the UK from the slowest-growing economy in the group to the second-slowest growing economy.
The United States is expected to be the fastest-growing major economy in 2023 at 1.8%, followed by Canada at 1.7%, Japan at 1.4%, Italy at 1.1% and France at 0.8%.
Growth in the UK remains well below the 1.5% average in 2023 for the developed world as a whole, including the G7 and other large economies.
IMF Research Director Pierre-Olivier Grinchat commented on the latest forecast: “The global economy continues to slowly recover from the pandemic and the Russian invasion of Ukraine. In the short term, signs of progress are undeniable.
“The COVID-19 health crisis is officially over, and supply chain disruptions have returned to pre-pandemic levels.
“Economic activity in the first quarter of this year has proven resilient despite a challenging environment in a surprisingly strong labor market.
“Energy and food prices have fallen significantly from their war-induced peaks, allowing global inflationary pressures to ease sooner than expected.
“And financial turmoil after the March banking turmoil is still contained thanks to strong measures by the US and Swiss authorities.”
The IMF added that most countries are focusing more on curbing inflation than growing their economies, after Russia’s invasion of Ukraine pushed prices up globally.
He also warned that promoting green investment is necessary not only to ensure supply, but also to ensure that countries have enough energy to meet their green goals.