IMF U-Turn on UK economy

The International Monetary Fund (IMF) has significantly revised its growth forecast for the UK economy, stating that it is expected to avoid a recession this year.

The report suggests that price growth will decrease gradually in the coming months. Despite these factors, the PMI data highlights a contrast between the struggling manufacturing sector and the relatively strong performance of the services sector, potentially resulting in a mixed performance for Germany in Q2.

UK Economy - Key Points

The IMF now predicts a growth rate of 0.4% in 2023, in contrast to last month's forecast of a 0.3% contraction.

The improved outlook is attributed to resilient demand and falling energy prices. However, the IMF cautions that inflation remains high and emphasizes the need for higher interest rates to address this issue.

The managing director of the IMF, Kristalina Georgieva, praised the government's decisive actions and responsible measures in recent months. She also cautioned against tax cuts at this time, citing concerns about affordability and desirability. T

The IMF report identifies considerable risks for the UK economy, particularly related to persistent price and wage setting that could result in prolonged high inflation. Additionally, the report highlights the urgency of addressing the high number of people who are not employed, particularly those facing long-term illnesses.

Sourced via BBC business.

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