20/20 Hindsight from the IMF

THE WEEK: The UK economic forecast upgrade from the IMF is nothing more than a game of catch, says Morningstar columnist Rodney Hobson

Rodney Hobson 12 July, 2013 | 11:59AM

International Monetary Fudge

Don’t try to make too much sense of the latest predications from the International Monetary Fund. It has no more idea of forecasting than anyone else. However, the one thing that it has got almost right this time, having got it horribly wrong three months ago, is to upgrade the outlook for the UK economy over the rest of this year.

The IMF now expects the UK economy to record growth of 0.9% this year compared with a forecast reduced to 0.7% three months ago. If that downgrading of our outlook in April looked to be erring on the side of caution then, it looks downright stupid now.

Most economists are forecasting at least 1% for the UK in 2013 with the actual figure possibly coming out at 1.2%. You could be forgiven for scaling back your hopes in the light of the latest IMF forecast but you would be wrong to do so.  With growth of 0.3% in the first quarter and 0.5%, possibly 0.6%, expected for the second quarter, the IMF is effectively forecasting no growth in one or perhaps both quarters in the second half.

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About Author

Rodney Hobson

Rodney Hobson  is a columnist for Morningstar.co.uk and author of several investing books, including The Dividend Investor and How to Build a Share Portfolio.

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