IMF upgrades UK growth outlook

9 Apr 14
UK growth is set to outstrip all other major advanced economies this year, according to the International Monetary Fund’s World Economic Outlook

The bi-annual update predicted UK growth of 2.9% this year, up from the last forecast of 2.5% and more than the Office for Budget Responsibility’s forecast of 2.7%. This is also greater that the 2.8% predicted for the US, 2.0% for Canada, 1.2% for the eurozone and 1.4% for Japan. 

However, in 2015, UK growth is set to fall back to slightly to 2.5%, the IMF said.

Asked whether the recovery in the UK was a ‘bubble’ that had been inflated by low interest rates, quantitative easing and government help for the housing market, Thomas Helbling, chief of the IMF’s World Economic Studies Division, said the turnaround in the UK housing market had helped the recovery.

‘House prices have increased, in particular in London,’ he said. 

‘So it is an issue of macroprudential policies and Bank of England to review the financial stability implications of the rising housing prices. But at this point, the turnaround in the economy is a reflection that monetary policy has worked in conjunction with great foreign investor interest.’

Globally, growth is set to average 3.6% this year and to rise again to 3.9% in 2015, the IMF said.

‘The recovery, which was starting to take hold in October, is becoming not only stronger, but also broader,’ said the IMF’s chief economist Olivier Blanchard.

‘Although we are far short of a full recovery, the normalisation of monetary policy – both conventional and unconventional – is now on the agenda.’


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