LONDON – The International Monetary Fund on Tuesday raised its growth forecast for the United Kingdom for 2024 to 0.7% from 0.5%, providing a fresh boost to the country’s economy. New government.
Looking ahead, the Washington, DC-based International Monetary Fund reiterated its forecast of 1.5% growth for the UK in 2025 in the July update of its World Economic Outlook.
The improvements come after two years of stagnation, with the UK set to fall into a shallow recession in the second half of 2023. However, GDP growth in May was subdued. Higher than analysts’ expectations By 0.4%, while summer events, including Euro 2024 Football Championship And even Taylor Swift Eras Tour It is expected to boost economic activity.
Investment bank Goldman Sachs earlier this month And raised its expectations for 2025. UK economic growth rose by 0.1 percentage points to 1.6%. The report pointed to the financial plans of the new Labour government led by Prime Minister Keir Starmer, which include reforming planning and tightening trade ties with the European Union.
On Friday, Deutsche Bank joined Goldman Sachs in raising its forecast for the UK, with economists saying in a note that they now expect GDP to grow by 1.2% this year, much higher than their previous forecast of 0.8%.
Deutsche Bank said the country’s May GDP showed strength in the professional services and construction sectors, with the euro expected to provide an additional boost to hospitality and leisure.
Meanwhile, Jefferies analysts said in a Recent note The size of Labour’s parliamentary majority would make the UK look “relatively stable”, and that, along with regulatory reform, would increase the attractiveness of assets in the country.
This comes as the Bank of England is expected to start cutting interest rates in the coming months. UK inflation hits central bank Target 2% In May, economists polled by Reuters expect it to continue to decline to 1.9% in Wednesday’s release.
Other economies whose growth forecasts for 2024 were improved by the IMF on Tuesday are the eurozone, which rose 0.1 percentage point to 0.9%, Spain, which rose 0.5 percentage point to 2.4%, and China, which rose 0.4 percentage point to 5%.
It lowered its forecast for the US economy by 0.1 percentage point to 2.6%.
The organization expected global growth of 3.2% this year, and said that global activity and world trade were stronger, especially due to strong exports from Asia.
However, he warned that the services sector was significantly delaying the process of reducing inflation, complicating monetary policy decisions.
The International Monetary Fund noted in its World Economic Outlook report that “upside risks to inflation have therefore increased, raising the possibility of higher interest rates for a longer period, in the context of rising trade tensions and increased political uncertainty.”
—CNBC’s Sophie Kidderlin and Vicki McKeever contributed.
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