IMF has said that U.K. is set for the slowest growth among the G7 economies next year
The International Monetary Fund (IMF) has said that United Kingdom (U.K.) is set for the slowest growth among the G7 economies next year.
The IMF predicted that U.K.’s growth will fall to 0.5% in 2023 as against its forecast in April of 1.2%. The global economy has also shrunk for the fist time since 2020, owing to Coronavirus (COVID-19) and Russia’s invasion of Ukraine.
With growth stalling in the U.K., United States (U.S.), China and Europe, the world may soon be teetering on the edge of a global recession. The IMF has cut its 2022 global growth forecast to just 3.2% and warned the slowdown risks being even more severe.
Taking it to twitter, the IMF tweeted,
The world’s three largest economies – the US, China, and the Euro Area – – are stalling, with significant consequences for the global outlook. Growth will slow sharply from 6.1% in 2021 to 3.2% in 2022. More on #IMFBlog https://t.co/opcWkQVD5w #WEO pic.twitter.com/UQjRgs5FWE
— IMF (@IMFNews) July 26, 2022
It said that rising energy prices and global food crisis initiated by Russia by blocking supply of grains at Ukraine Ports are major factors for squeezing the households and businesses.
The probability of a recession in the G7 economies – Canada, France, Germany, Italy, Japan, the U.S. and U.K. – now stands at roughly 15% which is 4 times higher than usual. It forecasts inflation to reach 6.6% in advanced economies and 9.5% in emerging economies, nearly a full percentage point higher than it expected in April 2022.
Brexit may not have helped U.K. but it’s our reliance on fossil fuels, which makes up 75% of its energy mix, compared to just over half of the European Union (E.U.), has made it more vulnerable. The U.K. faces more fundamental issues than the current crisis, with living standards having dropped behind many competitors over the last 15 years, which means there has been alack of investment in skills, equipment and infrastructure. The IMF had earlier suggested that one way to overcome it is to raise the taxes and not reduce them.
The U.S. saw the steepest downgrade than any country in 2022. The IMF cut its growth forecast for U.S to 2.3% this year, from 3.7% previously, and to just 1% in 2023. Meanwhile growth in China is expected to fall to 3.3% this year, the slowest rate in nearly four decades, as the country wrestles with new COVID-19 lockdowns.
In case of Europe surviving without dependence of Russian gas will be difficult. It warned that in case of a shutdown of Russian gas flows to Europe, global economic growth could fall to 2% next year, a pace the world has fallen below just 5 times since 1970.
