The International Monetary Fund has increased the United Kingdom’s growth forecast for 2013, while at the same time lowering its forecast for Italy, France, Germany and the rest of the euro zone.
The upgrade for the UK followed similar moves by a number of economists in different banks as a response to several data reports and surveys released over the past few months suggesting the economy was in recovery. The UK economy grew by 0.3% over the first quarter of 2013.
However, a fall in factory output plus an increase in May’s trade deficit that were released on Tuesday, served to remind officials that the economic recovery is still quite fragile and has not spread to every part of the UK economy.
The IMF announced that it expected the economy in the UK to increase by 0.9% during the year, up from its April projection of 0.6%.
However, the Tuesday projection is still less than what the IMF had forecast in January when it projected an annual expansion of 1%.
The IMF also left is 1.5% growth projection for 2014 unchanged, which is a modest rate for a large economy coming out of a long stretch of shrinkage followed by stagnation.
The gloomier outlook from the IMF for the eurozone will add worry for policymakers in the UK, since the common currency region is an area were many exports from Britain are sent.
A decline, which was unexpected, in factory output might be tied to a wider trend taking place in Europe. Figures released on Monday show unexpectedly large declines in output for the Czech Republic, Germany, Sweden and Turkey.