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UK left behind in IMF global economic growth upgrade

October 10, 2017 10:23 AM
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The International Monetary Fund maintains its UK forecast following a summer downgrade, citing continuing Brexit uncertainty.

The world's lender of last resort said in its latest World Economic Outlook that Brexit uncertainties were continuing to hold the UK back - maintaining key figures from its summer downgrade.

It forecast a static gross domestic product (GDP) growth of 1.7% this year, slowing further to 1.5% in 2018.

Such a performance would mean the economy falling behind its biggest rivals in growth terms after being the second-fastest in the G7 last year despite the Brexit vote.

It was only in 2017 that price increases - linked to rising import costs because of the fall in the value of the pound - started to filter through, with the pace of inflation overtaking income growth and hitting household spending.

Hopes that sterling's weakness would boost manufacturing exporters - offsetting some of the slowdown in the dominant services sector - have so far proved largely elusive.

At the same time, the pace of recovery in eurozone nations has finally picked up though the UK is still predicted by the IMF to grow at a stronger pace this year than France (1.6%), Italy (1.5%) - as well as Japan (1.5%).

The IMF overturned a summer downgrade to forecast the US economy would now grow by 2.2% this year, with total world growth expectations rising 0.1% to 3.6% as a "global cyclical upswing" continued.

"Financial conditions remain buoyant across the world, and financial markets seem to be expecting little turbulence going forward, even as the Federal Reserve continues its monetary normalisation process and the European Central Bank inches up to its own," the report said.

It reiterated its call for national governments to support growth through investment and not rely on central bank support.

Commenting specifically on the UK it said: "The medium-term growth outlook is highly uncertain and will depend in part on the new economic relationship with the EU and the extent of the increase in barriers to trade, migration, and cross-border financial activity."

Source: news.sky.com

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