Global Markets
Home›Global Markets›Europe›IMF lifts UK GDP growth forecast as Iran-war impact ea…
IMF lifts UK GDP growth forecast as Iran-war impact eases
The IMF projects UK GDP growth of 1.0% for 2026, up 0.2 points from its April forecast, and keeps next year’s outlook at 1.3%.
Guardian Economics reports the International Monetary Fund has upgraded its UK growth forecast in its July update of the World Economic Outlook, citing hopes that the economic impact of the Iran war may be less severe than previously feared. The IMF projected UK GDP to expand 1.0% this year, a 0.2 percentage point increase from its April forecast, placing the UK among the fastest-growing economies in the G7 in 2026.
The IMF left growth forecasts for other G7 countries weaker or unchanged, while it kept the UK’s next year growth rate at 1.3%. The update also noted that inflation is expected to fall back toward the government’s 2% target by mid-2027.
The story says the forecast adds to signals that the incoming UK prime minister may face an economy less battered by the Middle East conflict than markets had feared. It also points to official data showing UK inflation unexpectedly remained unchanged in May, with markets pricing in just one interest rate rise by next spring.
Guardian Economics adds that global growth in the IMF’s baseline was broadly unchanged versus April, at 3.0% this year and 3.4% next. The report links resilience in part to the AI investment boom, even as global oil prices have fluctuated amid renewed uncertainty about prospects for peace.