The International Monetary Fund (IMF) now says that it expects the United Kingdom (U.K.) to avoid an economic recession this year.
The IMF said continued consumer demand and declining energy prices led it to reverse its earlier forecast that called for the U.K. to enter a recession in this year’s second half.
The agency noted that British economic activity has slowed significantly, inflation remains high at 10.1%, and the overall economy continues to feel the impact of Russia’s invasion of Ukraine.
However, the IMF also said that the U.K. has weathered the recent global banking crisis well and that labor activity has been strong coming out of the Covid-19 pandemic.
Previously the IMF had forecast U.K. economic growth this year would shrink by 0.3%, making it the worst performer among G20 nations.
The new outlook suggests U.K. economic growth will reach 0.4% in 2023, a 0.7 percentage point improvement.
The IMF maintains that U.K. gross domestic product (GDP) will likely grow by 1% in 2024, and by 2% in both 2025 and 2026.
