World Bank economists yesterday upgraded their forecasts for UK growth over the next three years, aided by accelerating growth in emerging and advanced economies.
Against an improving international backdrop, the UK economy is now expected to expand by 1.7 per cent in 2017. This has been revised up from an estimate of 1.2 per cent in January.
Annual real GDP growth forecasts for 2018 and 2019 have also been bumped up, from projections of 1.3 per cent to 1.5 per cent.
Growth in the economy slowed to 0.2 per cent in the first quarter of this year, according to Office for National Statistics data, a smaller rise than first thought. This was due to a slowdown in the dominant services sector and rising inflation.
Last year, Britain’s economy grew by 1.8 per cent, though this was down from 2.2 per cent in 2015 and 3.1 per cent in 2014.
The World Bank has left its previous forecast for global economic growth unchanged at 2.7 per cent, and still expects the world economy to expand by 2.9 per cent in 2018 and 2019.
It pointed to a pickup in manufacturing and trade, rising market confidence and stabilising commodity prices as factors that will allow growth to resume in emerging and developing economies.
“The reassuring news is that trade is recovering,” said World Bank chief economist Paul Romer. “The concern is that investment remains weak.”
Growth in advanced economies is forecast to increase and exceed its long-term average by 2018.
“Activity in advanced economies is expected to gain momentum in 2017, supported by an upturn in the United States,” the World Bank said in its Global Economic Prospects report.
“In the euro area and Japan, growth forecasts have been upgraded reflecting strengthening domestic demand and exports.”However, the Bank pointed to the rise of populist parties and Brexit negotiations as posing risks to European growth.
“Negotiations around the exit of the United Kingdom from the European Union carry risks,” it said.
“If the uncertainty persists, it could weigh on investor confidence and derail the ongoing recovery in growth.”