(Alliance News) - Elections across the world have increased "uncertainty" over economic growth amid concerns over "significant swings" in policy from new governments, the International Monetary Fund has cautioned.
The global financial agency also warned that there is an increased prospect of "higher-for-even-longer" interest rates due to persistent wage and services inflation.
The IMF held its UK growth forecasts after an upgrade in May.
UK gross domestic product is set to grow by 0.7% in 2024 and by 1.5% next year, the IMF said.
The UK is one of a number of countries to have, or are set to have, elections this year, alongside France and the US.
Political uncertainty linked to the elections could impact the IMF's base growth projections, it cautioned.
"The potential for significant swings in economic policy as a result of elections this year, with negative spill-overs to the rest of the world, has increased the uncertainty around the baseline," the IMF said in the latest outlook update.
It comes amid a backdrop of falling inflation, although the report highlighted that this decline has slowed down in recent months.
"The momentum on global disinflation is slowing, signalling bumps along the path," the IMF said.
"Services price inflation is holding up progress on disinflation, which is complicating monetary policy normalization."
Interest rates have been broadly increased globally as countries have sought to grapple with high levels of inflation over the past two years.
In the UK, interest rates currently sit at a 16-year-high of 5.25%, with Bank of England policymakers opting to maintain rates at this level for the past seven meetings.
The IMF said concerns over wage inflation and service industry inflation, which have remained more persistent than over areas of the economy, mean that interest rates are taking longer than previously expected to decrease.
It added: "The risk of elevated inflation has raised the prospects of higher-for-even-longer interest rates, which in turn increases external, fiscal, and financial risks."
By Henry Saker-Clark, PA Deputy Business Editor
source: PA
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