IMF slashes UK growth forecasts
The UK has had its growth forecast slashed more than any other advanced economy, in the International Monetary Fund’s (IMF) latest growth update.
The IMF’s latest World Economic Outlook quarterly update, released earlier today, cut the economic growth forecast for 2012 by 0.6 percentage points - down to 0.2 per cent. The 2013 forecast was also cut by 0.6 percentage points, to 1.4 per cent.
The cuts contrasted with the IMF’s forecast for advanced economies as a whole - the body left its April revision for 2012 unchanged at 1.4 per cent and cut its 2013 growth forecast by 0.2 percentage points to 1.9 per cent.
The IMF said that since the last report in April the global recovery had “shown signs of further weakening”.
Overall global growth forecasts were also downgraded by the IMF, by 0.1 percentage points to 3.5 per cent for 2012 and by 0.2 percentage points to 3.9 per cent for 2013.
The IMF added that downside risks continued to “loom large, importantly reflecting risks of delayed or insufficient policy action”.
The US growth forecast for this year was cut by 0.1 percentage points this year and next’s forecast was also cut. France’s growth forecast was cut by 0.1 percentage points to 0.3 per cent in 2012 and by 0.2 percentage points to 0.8 per cent for 2013.
“Financial market and sovereign stress in the euro area periphery have ratcheted up, close to end-2011 levels,” the IMF report said.
“Growth in a number of major emerging market economies has been lower than forecast.”
The IMF said the “utmost priority” was to resolve the crisis in the eurozone, with recent agreements at an EU summit, particularly the plan to inject bailout funds directly into banks, “will help to break the adverse links between sovereigns and banks and create a banking union”.