Peterson Institute: UK economy to decline in 2023 and 2024 as US and eurozone grow

investmentweek.co.uk:

The UK economy shrank by 0.5% in July, worse than analysts had predicted and continuing a trend of weak economic growth in the UK.

In its Fall 2023 Global Economic Prospects report, the Washington-based economic think tank projected that, on a year-over-year basis, UK real GDP growth would decline 0.3% in 2023 and 0.2% in 2024.

PIIE noted the UK had recently entered a mild recession, as the country's gross domestic product shrank by 0.5% in July, worse than analysts had predicted and continuing a trend of weak economic growth in the UK.

UK GDP sags by 0.5% in July as recession looms 'around the corner'

The think tank said European growth may recover in 2024, but noted «the recovery there remains fragile». PIIE projected euro area real GDP growth to be 0.6% in 2023 and 1% in 2024.

President of the group Adam Posen worked on the Bank of England's monetary policy committee for three years, which he left in 2012 to take on the PIIE role.

In the US, the economy has seen «more solid growth this year than previously expected», but Karen Dynan, author of the report and PIIE nonresident senior fellow, expected higher interest rates will dampen growth momentum going forward.

Although economic activity seemed to have picked up in the third quarter of 2023, Dynan predicted a slowdown in the fourth quarter. US real GDP will continue to grow below its potential rate throughout the following year, with growth moderating from 2.2% this year to 1.6% in 2024.

Meanwhile, a soft landing for the global economy is possible, but not guaranteed, according to PIIE. After growing 3.4% in 2022, global GDP will expand 3% in 2023 and 2.8% in 2024.

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