Finance minister Jeremy Hunt found some reasons to cheer the
forecast, noting that the upgrade from January was the biggest
among the G7 nations.
After narrowly avoiding recession in 2022, Britain's economy
has shown some signs of resilience in early 2023. The Bank of
England says it expects slight growth in the second quarter
after a small contraction in the first three months of the year.
Prime Minister Rishi Sunak and Hunt are under pressure to
get Britain's economy growing more quickly before an election
expected next year but so far they have defied pressure from
within their Conservative Party to cut taxes, saying they are
focused primarily on lowering inflation.
The IMF forecast Britain's inflation would average 6.8% in
2023, down from 9.1% in 2022 but still way above the BoE's 2%
target and the highest among the G7 countries.
Asked why Britain was underperforming on growth, Olivier
Gourinchas, Director of the IMF's Research Department, cited its
reliance on gas, which surged in price last year after Russia's
invasion of Ukraine, and its tight labour market which led to a
"fairly aggressive" run of interest rate hikes by the BoE.
"There's already some signs of the transmission of this
monetary policy to the broader economy," Gourinchas told
reporters in Washington where the IMF is holdings its
twice-yearly meetings of top finance officials.
The IMF said it expected Britain's economy would grow by
1.0% in 2024, weaker than most other G7 economies with the
exception of Italy while matching Japan's expected growth rate.
(Writing by William Schomberg; Editing by Chizu Nomiyama and
Christina Fincher)
(Adds details from IMF news conference, Hunt comments)
April 11 (Reuters) - Britain now looks set for a
shallower economic hit this year than previously thought but
remains on course to suffer the sharpest contraction among the
world's big economies, the International Monetary Fund said on
Tuesday.
British gross domestic product will contract by 0.3% in
2023, the IMF said in its latest set of global forecasts, a
smaller shrinkage than the 0.6% contraction the Fund predicted
in January.
Britain is no longer the only Group of Seven economy set for
a fall in GDP this year as Germany is now expected to shrink by
0.1%, the IMF forecasts showed.
But its contraction this year is set to be the biggest among
the Group of 20 economies, according to the IMF's forecasts.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.