IMF Says UK Will Avoid Recession, Grow 0.4% In 2023

News in brief: The UK is projected to avoid a recession and see a 0.4% economic growth in 2023, according to the IMF.

The International Monetary Fund (IMF) said that the UK will avoid a recession as it had previously projected, adding that its economy will grow by 0.4% in 2023. Its forecast during the last month was that the country's economy will fall by 0.3%.

The economic organisation named resilient demand and falling energy prices as the drivers of growth. Although, it mentioned that inflation has remained high despite the higher interest rates.

IMF's managing director Kristalina Georgieva praised the UK government for taking decisive and responsible actions. However, she warned that the country should not cut taxes. In addition, the executive pointed at prices and wages not adjusting as quickly as expected to changes in economic conditions being the main challenge to the coutntry's efforts.

Chancellor Jeremy Hunt, head of the treasury, said that the plan would yield long-term prospects that are stronger than in Germany, France and Italy.

Also, despite the conservative predictions, it was good news for the country. It had been on the receiving end of harsh criticism over the mini budget that Prime Minister Liz Truss laid out.

For the near future, the monetary organisation predicts 1% growth in 2024 and 2% growth in 2025 and 2026. It also adds that it will not be able to bring inflation down to the targeted 2% until mid-2025, a longer period than its previous forecast.

The IMF warns the UK against celebrating prematurely on inflation, even despite it climbing the rankings in the G7 and G20. Managing director Kristalina Georgieva, as quoted by a BBC reporter, said that food prices refusing to come down should remain a source of concern.