The IMF technicians predict that growth will slow down to 0.4% in 2023, held back by the stricter monetary and fiscal policies necessary to contain inflation, which means improving by seven tenths the previous forecast that anticipated a contraction of 0. 3%.
The UK Economy, The second largest in Europe will avoid entering a recession according to the forecasts of the International Monetary Fund (IMF), which now anticipates a GDP expansion of 0.4% versus the previously projected contraction of 0.3%.
“Built by resilient demand in the context of falling energy prices, the UK economy is expected to avoid a recession and maintain positive growth in 2023“, conclude the IMF experts at the end of their mission in the country to prepare the annual report ‘Article IV’.
In this way, the IMF technicians predict that growth will slow to 0.4% in 2023, held back by tighter monetary and fiscal policies necessary to contain inflation, which means improve by seven tenths the previous forecast that anticipated a contraction of 0.3%.
United Kingdom
Reuters
In this regard, they point out that the change in forecasts reflects a greater than expected resilience in both demand, including higher wages to keep up with inflation, a less contractionary fiscal stance in 2023 and increased confidence, as well as in supply by lowering energy costs and standardizing global supply chains.
What is expected for 2024
Face to 2024the IMF projects growth in the UK economy to gradually increase as disinflation softens the impact on real incomes, with an expansion of 1% in 2024 and an average growth of around 2% in 2025 and 2026mainly due to a projected relaxation in monetary and financial conditions.
Likewise, it is expected that the fall in energy prices and the growing economic slack substantially reduce inflation to around 5% per year by the end of 2023; and below the 2% target by mid-2025.
In this sense, the IMF considers necessary a further monetary tighteningunderscoring that interest rates may need to stay high for longer to more safely reduce inflation.
“The Bank of England should continue to focus on underlying measures of inflation, such as wage growth and services inflation.“, says the institution.
Source: Ambito
