The UK will no longer fall into recession this year

The IMF assured that by 2023, the United Kingdom will avoid having a difficult year at an economic level

The UK economy, the second largest in Europe, will avoid going into recession this year, according to new forecasts from the International Monetary Fund (IMF), which now anticipates a GDP expansion of 0.4 %, compared to a contraction of 0..3 % previously projected.

“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,” the IMF experts concluded 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 down to 0.4 % in 2023, slowed down by the stricter monetary and fiscal policies necessary to curb inflation, which means improving by seven tenths the previous forecast that anticipated a contraction of 0.3 %.

In this regard, they point out that the change in forecasts reflects greater-than-expected resilience both in demand, including higher wages to keep up with inflation, a less contractionary fiscal stance in 2023 and greater confidence, as well as in supply due to lower energy costs and the normalization of global supply chains.

Looking ahead to 2024, the 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 average growth of around 2 % in 2025 and 2026, mainly due to a projected relaxation in monetary and financial conditions.

K. Tovar

Source: Swissinfo

(Reference image source: Rodrigo Santos, Unsplash)

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