The International Monetary Fund (IMF) has projected that Russia’s economy will outpace all other advanced economies, including the US, with a growth rate of 3.2% this year. This forecast is attributed to steady oil exports and high government spending in Russia. Despite being sanctioned for its invasion of Ukraine, Russia’s economy is expected to grow further in 2025. Investments from corporate and state-owned enterprises, along with robust private consumption and strong oil exports, have been key drivers of this growth, according to the IMF.
The IMF also downgraded its growth forecasts for Europe and the UK, with the UK expected to have the second weakest performance among the G7 nations this year, behind Germany. However, growth is expected to improve in 2025, placing the UK among the top three best performers in the G7. Despite this positive outlook, interest rates in the UK are projected to remain higher than other advanced nations, close to 4% until 2029. Chancellor Jeremy Hunt welcomed the IMF’s figures as a sign of the UK economy turning a corner, with lower inflation and faster growth predicted in the coming years.
Economists at the IMF have warned about the potential impact of escalating conflicts in the Middle East, such as the Israel-Hamas conflict, on global food and energy prices. Continued attacks on ships in the Red Sea and the ongoing war in Ukraine could also pose risks to the global economy. A potential increase in food, energy, and transport costs could disproportionately affect lower-income countries, putting additional strain on already vulnerable economies.
