UK economy expected to grow more slowly than previously thought, says IMF report
The downgrade in the IMF’s forecast came after official data showed the UK has less ground to recover following the pandemic.
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The UK’s economy will grow more slowly than expected over the next two years, and will be among the worst performers in the G7 group of economies, the International Monetary Fund (IMF) has forecast.
The body’s economists expect UK growth to hit 0.6% this year, and 1.6% next.
It would make the economy the second-worst performer in the G7 this year and the joint third-worst performer in 2025.
The IMF’s forecast for this year is unchanged since its past report in October, but has been downgraded by 0.4 percentage points for next year.
But the IMF said that change is largely due to a revision to official data, rather than a worsening economic situation.
In September, the Office for National Statistics (ONS) said that between 2019 and the end of 2021 the size of the economy rose 0.6%, according to its revised figures. It had previously estimated a 1.2% contraction in the same period.
The markdown to growth in 2025 of 0.4 percentage point reflects reduced scope for growth to catch up in light of recent upward statistical revisions to the level of output through the pandemic period
The IMF said: “The markdown to growth in 2025 of 0.4 percentage point reflects reduced scope for growth to catch up in light of recent upward statistical revisions to the level of output through the pandemic period.”
It said the UK economy will grow slightly faster this year than it did last as the negative effects of high energy prices wane.
Next year growth will speed up as inflation drops, which allows people’s real incomes to recover.
The global economy is expected to grow by 3.1% this year and 3.2% next year.
That is below the 3.8% average between 2000 and 2019, but is 0.2 percentage points higher than the IMF’s previous forecast in October.
The upgrade is thanks to the US economy appearing more resilient than expected, and the Chinese government rolling out fiscal support, the IMF said.
It warned that continued attacks in the Red Sea could send new shocks through the global economy.
“Container shipping costs have already sharply increased, and the situation in the Middle East remains volatile,” it said.
“Further geoeconomic fragmentation could also constrain the cross-border flow of commodities, causing additional price volatility.”