IMF Forecasts 3.2% GDP Growth for UK

The International Monetary Fund has raised its forecast for Britain’s GDP growth rate for the second time this year, heaping further embarrassment on the Washington-based organisation following its warning in 2013 that George Osborne’s austerity policies were “playing with fire” and could trigger a slump.

The IMF said Britain would maintain its status as one of the world’s fastest expanding major economies following a surge in growth to 3.2% by the end of the year.

The lender of last resort, which is headed by former French finance minister Christine Lagarde, uprated the UK’s outlook for GDP growth by 0.4 percentage points this year and 0.2 percentage points to 2.7% next year in its latest world economic outlook.

After 18 months of recovery, the forecast that growth would continue for the rest of the year and into 2015 was a boost for George Osborne, especially after the same organisation criticised his austerity programme only last year.

Olivier Blanchard, the IMF’s chief economist, said last April that the risk for Britain of “having no growth, or very little growth, for a long time is very high” should the government maintain its austerity programme.

Since then the UK has seen employment expand rapidly and the economy regain its pre-recession level of output. In April this year, the IMF forecast that the UK would outperform other big economies with 2.9% growth.

The Office for National Statistics is to give its first estimate on Friday of output in the three months to the end of June following a strong first quarter that saw expansion hit 0.8%, giving an annual growth rate of more than 3%.

Despite a recent slowdown in high street spending and a cooling in house-price rises, the figures were expected to confirm what the governor of the Bank of England, Mark Carney, said in a speech on Wednesday was already true – that Britain had already passed its previous peak and was reaching new highs.

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza