IMF: Germany to be weakest major economy in 2024 while UK downgraded again
The International Monetary Fund (IMF) now predicts that Germany, not the UK, will have the slowest-growing economy this year. However, the IMF has significantly reduced its forecasts for the UK for the following year.
The IMF said the UK is expected to grow by 0.6% in 2024, aligning with its earlier October forecasts. This represents a slight improvement from the anticipated 0.5% expansion in the previous year, attributed to the diminishing “negative effects of high energy prices.”
These projections position the UK near the bottom of the IMF’s growth rankings, with only Germany expected to have a weaker performance this year. Germany received a 0.4 percentage point downgrade, projecting a growth of 0.5% in 2024.
Looking ahead to 2025, the IMF anticipates a growth pickup in the UK to 1.6%, citing disinflation leading to “an easing in financial conditions” and increased real income growth. However, this marks a 0.4 percentage point reduction from the October forecasts. The IMF attributes this revision to the reduced potential for growth to catch up, considering recent upward statistical revisions during the pandemic.
In the previous year, the Office for National Statistics (ONS) upgraded its estimate of the UK’s economic performance during the pandemic. Initially suggesting a slightly smaller economy than pre-pandemic levels, the revisions revealed that the economy was, in fact, 1.8% larger than before the pandemic.