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In the News

IMF downgrades UK Growth Forecast

Graham Watson

11th April 2023

The UK is forecast to be the worst performing economy, both in the G7 and the larger G20 group of nations in 2023, with the IMF predicting that the economy is going to shrink by 0.3%, before growing by 1% next year. The reasons for this country-specific poor performance include its exposure to high gas prices, high interest rates and its relatively poor trade performance.

Please read: UK to be one of worst performing economies this year, predicts IMF (BBC News)

Of course, this is only a forecast, but watch for the response to this: no doubt the government will suggest that the IMF has been notoriously inaccurate in the past.

IMF Growth Forecast: 2023

  • USA: 1.6%
  • Germany: -0.1%
  • France: 0.7%
  • Italy: 0.7%
  • Spain: 1.5%
  • Japan: 1.3%
  • UK: -0.3%
  • Canada: 1.5%
  • China: 5.2%
  • India: 5.9%
  • Russia: 0.7%
  • Brazil: 0.9%
  • Mexico: 1.8%
  • KSA: 3.1%
  • Nigeria: 3.2%
  • RSA: 0.1%

The IMF are of the view that as inflation falls back, economies are likely to see interest rates decline back to pre-pandemic levels, provided that policymakers keep debt in order.

Please read: Interest rates likely to fall to pre-Covid levels, IMF predicts (BBC News)

This isn't really news - it seems to be inevitable - however, some of the reasoning about the longer-term influences that are going to drive interest rates are interesting: ongoing issues with low productivity and the macroeconomic effects of an ageing population are especially singled out

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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