Britain the only G7 economy forecast to shrink in 2023

February 1, 2023

Britain the only G7 economy forecast to shrink in 2023

The UK economy will shrink and perform worse than other advanced economies, including Russia, as the cost of living continues to hit households.

The IMF said the economy will contract by 0.6% in 2023, rather than grow slightly as previously predicted.

The IMF, which works to encourage stable economic growth, stated it had downgraded its forecast for the UK because of its high energy prices, rising mortgage costs and increased taxes, as well as persistent worker shortages. It did not mention Brexit in its report as a factor for the UK not performing as well as others, with it being three years since the UK left the EU.

With its latest forecast, the IMF expects the UK to be the only country to shrink next year across all the advanced and emerging economies. Even sanctions-hit Russia is now forecast to grow this year.

With projections forecasting the UK economy to contract, the IMF has predicted contrasting economic growth of 1.4% in the US, 0.1% in Germany and 0.7% in France.

However, with the future outlook, the IMF expects the UK to grow in 2024, revising up its forecast to 0.9% from 0.6% in a newly released economic outlook.

South Korea posts the worst trade deficit in its history

South Korea recorded a trade deficit of $47.5 billion for 2022, official data from the customs agency showed.

It marked the worst trade deficit since the agency started compiling data in 1956 and far more than the $20.6 billion trade deficit in 1996.

January exports fell $46.3 billion, or 16.6% – declining more than expectations for a drop of 11.3%. Imports fell $59 billion, or 2.6%, falling less than forecasts of a 3.6% decline.

That resulted in a deficit of $12.7 billion for January, more than the $9.27 billion expected by economists polled by Reuters.

The Korean won traded at 1,232.24 against the U.S. dollar following the report.

This comes as global smartphone shipments dropped 18% to 296.9 million units in the final quarter of 2022 as demand fell.

Euro zone economy unexpectedly grows in Q4 but weak 2023 looms

The currency-area grew at a faster clip than its global peers, reversing traditional positions.

The eurozone eked out growth in the final three months of 2022, managing to avoid a recession even as sky-high energy costs, waning confidence, and rising interest rates took a toll on the economy that is likely to persist into this year.

Gross domestic product across the currency bloc expanded by a tiny 0.1 per cent in the fourth quarter, data from Eurostat showed on Tuesday, outperforming expectations in a Reuters poll for a 0.1 per cent drop. Compared to a year earlier, growth was 1.9 per cent, just beating expectations of 1.8 per cent.

Among the biggest eurozone countries, Germany and Italy recorded negative growth rates for the quarter but France and Spain expanded, Eurostat added, based on a flash estimate that is subject to revisions.

Russia's nearly year-old war in Ukraine has proved costly for the eurozone, which now spans 350 million people in 20 countries, given some members' heavy reliance on cheap energy.

Surging oil and gas prices have depleted savings and held back investment while forcing the European Central Bank into unprecedented rate hikes to arrest inflation.

But the economy has displayed some unexpected resilience, too — much like during the Covid-19 pandemic, when growth outperformed expectations as businesses adjusted faster to changed circumstances than policymakers had predicted.

All Insight Articles >Contact Us >

Latest Insight