IMF raises UK growth forecast but global outlook unchanged

The International Monetary Fund (IMF) raised its forecast for the UK economy this year, reversing a cut just over three months ago because of the pace of growth in the second half of 2016.

It also raised its forecast for the US, saying the Trump presidency’s economic policies would drive growth to 2.3 per cent in 2017 and to 2.5 per cent in 2018,

The fund also raised its forecast for China’s economic growth this year by 0.3 percentage points to 6.5 per cent on expectations of continued policy stimulus.

In an update to its World Economic Outlook published on Monday, the Washington-based group upgraded its UK projection to 1.5 per cent from 1.1 per cent. That would compare with estimated growth of 2 per cent in 2016.

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The fund, which cut the UK forecast in early October, said the latest move was “mostly on account of a stronger-than-expected performance during the latter part of 2016”. It also said it was lowering its 2018 projection by 0.3 percentage point to 1.4 per cent.

Scaremongering

Pro-Brexit campaigners have accused the IMF and other institutions of scaremongering before the June referendum that saw Britain vote to leave the European Union.

Prime minister Theresa May is due to deliver a speech outlining her vision for separating from the bloc on Tuesday. Speculation that she will favour abandoning the single market sent the pound lower on Monday.

The IMF kept its forecasts for global growth this year and next unchanged at 3.4 per cent and 3.6 per cent. For the euro area, 1.6 per cent expansion is seen in 2016 and 2017, reflecting a slight upgrade for this year. – (Bloomberg)