IMF: Raises UK economic forecast, but political turmoil could impact economic growth.

According to ME News, on May 19 (UTC+8), the International Monetary Fund (IMF) raised its forecast for UK economic growth this year, but warned that further “domestic uncertainty” could impact consumption and investment as current political turmoil engulfs the government. The IMF projects the UK economy will grow by 1.0% this year, but this still implies a slowdown from 2025 onwards. In its annual assessment of the UK economy, the IMF stated, “While the UK economy has remained stable in recent years, the wars in the Middle East are weakening its near-term prospects.” The IMF said the upward revision to the 2026 forecast is due to pre-war economic momentum, reflected in recent stronger-than-expected growth and revisions to previous data. The report also stated that UK inflation is expected to rise to slightly below 4% by the end of the year, but assuming energy prices fall as expected by the market, the Bank of England could bring inflation back to its 2% target by the end of 2027 without raising interest rates. However, given the uncertainty surrounding the conflict in Iran, if the second wave of effects is stronger than expected, central banks may have to cut or raise interest rates and should be "prepared to respond decisively." (Source: ME)