The International Monetary Fund (IMF) has warned that the UK faces the slowest
rate of growth in the G7 next year.
The IMF predicts that UK economic growth will fall to 0.5% in 2023, which is
considerably lower than its previous prediction of 1.2%, which was forecast in
April.
Russia's invasion of Ukraine and the Covid-19 pandemic has caused the global
economy to shrink, the IMF stated. It has consequently cut its 2022 global
growth forecast to 3.2%.
It also said that rising prices and higher borrowing costs are continuing to
squeeze households and businesses around the world. The data revealed that in
the three months to July, global economic growth contracted, marking the first
decline since the onset of the pandemic.
The IMF predicts a 15% probability of recessions in the G7 economies, which
include Germany, France, the US, the UK, Japan, Canada and Italy. This is almost
four times higher than usual, according to the IMF.
Pierre-Olivier Gourinchas, Economic Counsellor and the Director of Research at
the IMF, said:
'The global economy, still reeling from the pandemic and Russia's invasion of
Ukraine, is facing an increasingly gloomy and uncertain outlook.
'Higher-than-expected inflation, especially in the United States and major
European economies, is triggering a tightening of global financial
conditions. China's slowdown has been worse than anticipated amid Covid-19
outbreaks and lockdowns, and there have been further negative spillovers
from the war in Ukraine. As a result, global output contracted in the second
quarter of this year.
'The outlook has darkened significantly since April. The world may soon be
teetering on the edge of a global recession, only two years after the last
one. Multilateral cooperation will be key in many areas, from climate
transition and pandemic preparedness to food security and debt distress.'
Internet links: IMF website