IMF downgrades US and UK growth

09:33 • 24.07.17
Economy

The UK and US economies will expand more slowly in 2017 than previously predicted, according to the International Monetary Fund (IMF).


It said "weaker-than-expected activity" in the first three months of the year meant the UK would grow by 1.7%, compared with an earlier 2% forecast.


And the IMF revised down its US outlook from 2.3% to 2.1%, BBC News reports.


However, its overall global economic predictions - of 3.5% growth in 2017 and 3.6% in 2018 - remain unchanged.


Meanwhile the outlook for several eurozone economies is brighter than initially thought, with countries including France, Germany, Italy and Spain seeing growth forecasts revised up.


In its latest World Economic Outlook, the IMF said the "pick-up in global growth" that it had anticipated in its previous survey in April remained "on track".

 

But it added that while the global growth projection was unchanged that masked "somewhat different contributions at the country level".


The UK growth forecast for 2018 remains unchanged at 1.5%, but US growth for next year is now predicted to come in at 2.1%, instead of the 2.5% previously forecast.


"While the markdown in the [US] 2017 forecast reflects in part the weak growth outturn in the first quarter of the year, the major factor behind the growth revision, especially for 2018, is the assumption that fiscal policy will be less expansionary than previously assumed, given the uncertainty about the timing and nature of US fiscal policy changes," the IMF said.

 

"Market expectations of fiscal stimulus have also receded."


A UK Treasury spokesperson said the IMF forecast underlined why the government's plans to increase productivity and get "the very best deal with the EU" after Brexit were "vitally important".


"Employment is at a record high and the deficit is down by three quarters, showing that the fundamentals of our economy are strong," they added.

 

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