IMF raises global growth forecast but UK set to shrink

The International Monetary Fund has raised its forecasts for the global economy for 2023, stating that growth has been "surprisingly resilient". 

However, it also said the UK is likely to be the only leading economy to head into recession in 2023.

The IMF said it expects the global economy to grow 2.9% in 2022, a 0.2 percentage point increase from the last forecast, published in October.

It expects growth to "rebound" in 2024 to 3.1%.

"Economic growth proved surprisingly resilient in the third quarter of last year, with strong labor markets, robust household consumption and business investment, and better-than-expected adaptation to the energy crisis in Europe," said Pierre-Olivier Gourinchas, the chief economist, in a blog published Monday (30 January).

Stock Spotlight: ICICI Bank piques interest of EM managers

He noted the boost that has come from China's "sudden re-opening" and added that the nation and India combine to account for half of the global growth this year.

The US and the Euro area will account for just a tenth.

UK singled out

While the January update proved positive for most economies, the UK was singled out, with the fund saying it will shrink and perform worse than other advanced economies.

The IMF predicted the UK will contract by 0.6% in 2023, a 0.9 percentage point drop from October's figure.

UK company profit warnings spike 50% in 2022

This update said the downward revision reflected the "tighter" fiscal and monetary policies, financial conditions and the impact of energy prices on household budgets.

The fund said the nation would be the only one to suffer a year of declining GDP as even Russia is anticipated to grow by 1% this year.

However, Gourinchas told the BBC the plans from the Treasury following the Autumn Statement showed the UK was "certainly trying to carefully navigate these different challenges and we think that they are on the right track".