The United Kingdom’s economic growth is expected to be the second slowest among the G7 nations this year, as projected by the International Monetary Fund (IMF), despite a noteworthy upgrade in the country’s prospects.
The IMF’s projections, cited in a news report by a Scottish media platform, indicate that the UK’s output is set to grow by 0.4% in 2023, surpassing Germany but falling short of all other G7 countries.
With a positive adjustment of 0.7 percentage points from its previous projection, the Fund acknowledged the stronger-than-expected consumption and decreased Brexit uncertainties as contributing factors.
The International Monetary Fund (IMF) reported on Tuesday that the United States is anticipated to experience the swiftest growth among all G7 countries, reaching 1.8%.
The IMF’s projections indicate that after the United States, Canada will have the next highest growth rate at 1.7%, followed by Japan at 1.4%, Italy at 1.1%, France at 0.8%, the UK at 0.4%, and Germany, which is expected to see a decline of 0.3% in output.
According to the IMF, growth is expected to drop from 2.7% to 1.5% in 2023 across all advanced economies, encompassing both the G7 nations and other countries.
As stated in the report by STV, global growth is expected to be 3.0%.
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‘Growth in the United Kingdom is projected to decline from 4.1% in 2022 to 0.4% in 2023, then to rise to 1.0% in 2024,’ the IMF said.
‘This is an upward revision of 0.7 percentage points for 2023, reflecting stronger-than-expected consumption and investment from the confidence effects of falling energy prices, lower post-Brexit uncertainty (following the Windsor Framework agreement), and a resilient financial sector as the March global banking stress dissipates.’
This is the most recent among a series of IMF forecasts, all indicating that the UK will trail behind several international peers in the current year.
However, the Government has consistently contested these projections, as evidenced by Chancellor Jeremy Hunt being overheard by Sky News in April reassuring IMF boss Kristalina Georgieva, saying, ‘We’re very focused on proving you wrong.’
On Tuesday the Treasury said, ‘The IMF have praised the UK’s decisive action to fight inflation, and today’s report confirms a big upgrade to our growth forecast compared to April, with the UK set to grow at the same rate as the United States and Japan next year.’
‘The IMF also say it’s important to rebuild our finances and maintain financial stability; that’s why we have a clear plan to halve inflation this year, grow the economy and get debt falling.’
According to the IMF’s Tuesday report, reducing inflation has become the primary objective for the majority of countries worldwide.
‘Following the build-up of gas inventories in Europe and weaker-than-expected demand in China, energy and food prices have dropped substantially from their 2022 peaks, although food prices remain elevated,’ it added.
In addition, the IMF underlined the crucial role of green investment in guaranteeing that countries have enough energy to achieve their environmental objectives.