UK economy to fare worse than any other country in developed world in 2023: IMF

UK Economy: IMF upgraded its growth projections for Italy and Germany which implies that both the countries will now grow more than the UK in 2023.

The International Monetary Fund (IMF) said that UK's economy would fare worse than any other country in the developed world - including Russia, in the latest update of its economic forecasts. UK's gross domestic product (GDP) is estimated to contract by 0.6% in 2023, IMF predicted while noting that the broader global economy was doing better than expected.

UK Economy: A customer looks at a clothing stall at Petticoat Lane Market in London, UK. (Bloomberg)

UK economy would face a downgrade “reflecting tighter fiscal and monetary policies and financial conditions and still-high energy retail prices weighing on household budgets”, IMF noted. The country had previously been forecast to grow by 0.3% this year and 0.6% next year which the IMF said that it expects -0.6% this year and 0.9% growth in 2024.

“On the downside, severe health outcomes in China could hold back the recovery, Russia's war in Ukraine could escalate, and tighter global financing conditions could worsen debt distress,” IMF said.

IMF upgraded its growth projections for Italy and Germany which implies that both the countries will now grow more than the UK in 2023.

“The governor of the Bank of England recently said that any UK recession this year is likely to be shallower than previously predicted, however these figures confirm we are not immune to the pressures hitting nearly all advanced economies,” UK finance minister Jeremy Hunt said.

“Short-term challenges should not obscure our long-term prospects - the UK outperformed many forecasts last year, and if we stick to our plan to halve inflation, the UK is still predicted to grow faster than Germany and Japan over the coming years,” he added.