International Monetary Fund predicts weaker UK growth in 2015 as lower oil prices and Greek uncertainty take their toll
The International Monetary Fund (IMF) has lowered its UK growth forecast to 2.4 per cent in 2015, down from 2.7 per cent in April. In 2016, growth will fall to 2.2 per cent, 0.1 percentage points lower than it originally predicted, the IMF said in an update to its World Economic Outlook released today.
It cut its global growth forecast to 3.3 per cent for 2015 – that's 0.2 percentage points lower than it predicted in April, although the figure is expected to rise to 3.8 per cent next year.
The IMF said a "setback in activity" in the US had caused the revision – despite a rebound in oil prices and more stable global inflation.
Among other factors affecting growth are the bank holiday in Greece and subsequent referendum, which pushed down the IMF's prediction for euro area growth to 2.5 per cent, from the 3.1 per cent it originally predicted.
Meanwhile, a sharp correction in the Chinese stock market over the past month is also likely to affect growth in the area.
The organisation urged advanced economies to keep "accommodative monetary policy" measures in place, to support economic activity and lift inflation.
"In a number of countries with fiscal space, the near-term fiscal stance should be eased, especially through increased infrastructure investment. In economies with high public debt, the pace of fiscal consolidation needs to strike an appropriate balance between debt reduction and imposing a drag on economic activity. Efforts at implementing structural reforms remain urgent across advanced economies, both to tackle crisis legacies and to raise potential output."