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IMF cuts growth forecast!
The International Monetary Fund (IMF) has warned that economic damage from the Ukraine conflict will contribute to a significant slowdown in the global economy with the UK set to be amongst the hardest hit.
In its latest assessment of world economic prospects, the IMF said the war in Ukraine is driving up fuel and food prices and that this will hit future growth prospects.
Global growth is now predicted to slow from an estimated 6.1% last year to 3.6% in both 2022 and 2023, 0.8 and 0.2 percentage points lower, respectively, than the organisation’s previous forecast published in January.
For the UK, the international soothsayer now predicts growth of 3.7% this year, down from January’s 4.7% prediction.
In 2023, the UK is forecast to have the slowest growth rate among the G7 advanced economies at just 1.2%, almost half the level of the previous forecast.
The IMF said this downgrade reflected elevated inflationary pressures and tighter monetary policy, along with the UK’s ongoing labour supply issues.
Meanwhile, the latest growth figures released by the Office for National Statistics (ONS) revealed a larger than expected slowdown in February, with the UK economy expanding by just 0.1%. This was significantly below January’s figure of 0.8% and lower than the consensus forecast in a Reuters poll of economists which predicted growth of 0.3%. ONS said the slowdown partly reflected a decline in manufacturing, with car production sharply down due to component shortages, and falls in computer
goods and chemical products.
Survey data also points to a more recent cooling in the pace of UK output.
The preliminary headline reading of the S&P Global/CIPS Composite Purchasing Managers’ Index dropped to a three month low of 57.6 in April, down from 60.9 in March, as high inflation and the Ukraine conflict weighed on service sector sentiment. http://sheldonflandersfinancialservices.co.uk/our-monthly-economic-review/