According to the International Monetary Fund, the UK will avoid recession in 2023.
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London – The International Monetary Fund said on Tuesday that it expects Britain to avoid recession and “maintain positive growth” in 2023.
Resilient demand, against a backdrop of falling energy prices, encouraged a positive, if “gloomy” outlook, the fund said.
The United Nations financial agency pointed out that compared with last year, the UK’s economic activity has slowed down significantly, and the current inflation rate of 10.1% remains “remaining high”. The UK economy continues to feel the effects of Russia’s full-scale invasion of Ukraine, as well as lingering supply scars from the Covid-19 pandemic.
British Finance Minister Jeremy Hunt said on Tuesday that “the job is not done” in tackling inflation and improving the UK’s growth prospects. He highlighted high inflation and high energy costs as challenges for the UK and internationally.
“We work every day to grow our economy and achieve this and other government priorities, and the IMF says we are doing just that,” Hunt told an IMF news conference.
The IMF said in its report that the UK had weathered recent global banking stress well, alluding to the recent collapse of Credit Suisse and turmoil in the US banking sector
“Global Good”
The agency’s report described the UK’s continued financial stability as a “global public good” and recommended evidence-based reforms for London to address rising labor slack in the wake of the pandemic, Regulatory uncertainty surrounding business investment, accelerating the country’s green transition.
Tuesday’s report offered a more positive development for the UK than the agency’s April World Economic Outlook. Forecasts last month suggested that UK economic growth would shrink by 0.3% in 2023, making it the worst performer in the G20 group. Newly released figures suggest that UK growth will now hit 0.4% this year – 0.7 percentage points higher than previously forecast.
According to the IMF, UK GDP could grow by 1% in 2024 and then around 2% in 2025 and 2026.
While somewhat pessimistic, the latest report was more dovish than the IMF’s statement in September, when it said new measures enacted by the newly elected UK government “could exacerbate inequality”. Many economic measures were subsequently rolled back, and then-Prime Minister Liz Truss left within 44 days of taking office.