UK to remain worst-performing G7 economy - IMF
The UK economy will remain the worst-performing G7 economy this year, according to forecasts published by the International Monetary Fund on Tuesday.
The IMF expects the UK economy to shrink by 0.3% this year - up from a previous forecast for a 0.6% contraction - then grow by 1% in 2024. It pointed to high inflation, currently running at 10.4%, and the selloff in UK bonds following September’s so-called mini budget.
It expects Germany to record the second-lowest growth rate among major economies, with a 0.1% decline this year, while the eurozone economy is seen growing 0.8% and the US 1.6%.
World growth is expected to decline this year to 2.8% from 3.4% in 2022, before rising slowly and settling at 3% in five years.
IMF chief economist Pierre-Olivier Gourinchas said we are entering "a perilous phase during which economic growth remains low by historical standards and financial risks have risen, yet inflation has not yet decisively turned the corner".
He added that below the surface, "turbulence is building, and the situation is quite fragile, as the recent bout of banking instability reminded us.
"Inflation is much stickier than anticipated even a few months ago. While global inflation has declined, that reflects mostly the sharp reversal in energy and food prices. But core inflation, excluding the volatile energy and food components, has not yet peaked in many countries."