The UK is the only advanced economy to be in the negative for growth this year, according to the International Monetary Fund’s (IMF’s) January World Economic Outlook update.

Growth in the UK is projected to be -0.6% in 2023, which is a 0.9% downward revision from IMF’s last update in October.

This, the fund said, reflects tighter fiscal and monetary policies and financial conditions and still-high energy retail prices weighing on household budgets.

For other advanced economies – the US, parts of the euro area and Japan – growth is, overall, projected to decline from 2.7% in 2022 to 1.2% in 2023. However, it is projected to rise to 1.4% in 2024.

Image: IMF

About 90% of advanced economies are projected to see a decline in growth in 2023 – however as mentioned, the UK is the only country in the negative.

“The global economy will slow down this year, before rebounding in 2024,” IMF chief economist, Pierre-Oliver Gourinchas said. However, a “global recession” is not on the cards, he added.

For emerging and developing economies, growth is expected to rise modestly.

About 84% of countries are expected to have lower inflation in 2023 than 2022 and global inflation is set to fall from 8.8% to 6.6%, the report added.

“The inflation news is encouraging, but the battle is far from won,” Gourinchas commented.

Pre-pandemic inflation was about 3.5%.

Also today (Tuesday, January 31), Kantar said that UK grocery inflation is at its highest level since it started tracking the figure in 2008.

Four-week grocery price inflation hit a record 16.7% in the four weeks to January 22, 2023 it said.

During this four-week period overall take-home grocery sales rose by 5.7%

On the upside, IMF said, a boost from pent-up demand in numerous economies or a faster fall in inflation are plausible. However, on the downside, severe health outcomes in China could hold back recovery, Russia’s war in Ukraine could escalate and tighter global financing costs could worsen debt.

Financial markets could also suddenly adapt to this news about inflation, which would hamper economic progress.

Going forward, in most economies the IMF said, the priority will be on achieving “sustained inflation”.