The International Monetary Fund (IMF) has upgraded the growth forecast for the UK to 0.9 per cent from 0.7 per cent in April.
The move comes in spite of the IMF downgrading the UK’s growth forecast from 1 per cent just three months ago in its World Economic Outlook report.
In spite of the improved forecast for the UK, the report downgraded forecasts for the majority of other regions, also trimming its overall global growth forecast for 2013 by 0.2 per cent to 3.1 per cent.
For 2014 this growth forecast was reduced by 0.2 per cent to 3.1 per cent amid continuing concerns about weakness in emerging markets.
The report said: “Downside risks to global growth prospects still dominate: while old risks remain, new risks have emerged, including the possibility of a longer growth slowdown in emerging market economies, especially given risks of lower potential growth, slowing credit, and possibly tighter financial conditions if the anticipated unwinding of monetary policy stimulus in the United States leads to sustained capital flow reversals.
“Stronger global growth will require additional policy action.”
China, which remains under pressure, had its forecast cut by the IMF by 0.3 per cent to 7.8 per cent for 2013 and to 7.7 per cent for 2014.
Additionally, the IMF said that the recession in the eurozone is likely to be deeper than originally anticipated for 2013, with the forecast contracting but 0.6 per cent.
The IMF’s World Economic Report added: “Growth will rise to just under 1 per cent in 2014, weaker than previously projected, in part due to the persistent effects of the constraints discussed above and the expected delays in policy implementation in key areas, but also due to base effects from the delayed recovery in 2013.”
Across the pond, the US will also experience more muted growth, the IMF report has said. The US forecast to achieve growth of 17 per cent in 2013, downgraded from 0.2 per cent in April.