LONDON: The IMF on Tuesday delivered a major U-turn on its forecast for the UK economy, saying it expected growth this year, just one month after predicting a contraction.
Britain’s economy is now predicted to expand by 0.4 percent, the International Monetary Fund said in its latest outlook document which partly cited weaker energy prices.
The institution ripped up its previous forecast in April of a 0.3-percent contraction.
But there had still been a “significant” slowdown from 2022, when the economy grew 4.1 percent despite sky-high inflation and energy bills owing to the Ukraine war.
“Buoyed by resilient demand in the context of declining energy prices, the UK economy is expected to avoid a recession and maintain positive growth in 2023,” it added in Tuesday’s statement.
“Still, economic activity has slowed significantly from last year and inflation remains stubbornly high following the severe terms-of-trade shock due to Russia’s war in Ukraine and, to some extent, labour supply scarring from the pandemic.”
It also cautioned that this year’s growth outlook remains “subdued”. The IMF said the 2023 upgrade reflected “higher-than-expected resilience” in both demand and supply, alongside improved confidence in reduced post-Brexit uncertainty as well as lower energy costs.
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