IMF raises forecast for UK growth on global picture

THE global economy has weathered the impact of the credit crunch better than first feared, the International Monetary Fund revealed last night.

According to the IMF, the world economy was "in a tough spot", but the outlook had improved after the slowdown in the first quarter was not as sharp as expected.

The IMF upped growth forecasts for the UK and US as it predicted the global economy would now grow by 4.1 per cent in 2008.

That is up from its forecast for 3.7 per cent in April's quarterly World Economic Outlook report.

Its latest quarterly outlook forecast that UK growth would increase to 1.8 per cent for 2008 and 1.7 per cent in 2009, up from 1.6 per cent.

Growth in America would 2008 slow to 1.3 per cent – but that is up from a gloomy earlier forecast for just 0.5 per cent.

Demand from advanced and emerging economies had proved more resilient than anticipated to recent commodity price and financial shocks, the IMF said.

However, despite the IMF's brighter outlook, a 4.1 per cent increase for the world economy would still be significantly below the 5 per cent growth seen in 2007.