IMF reduces euro zone GDP for 2017 by Brexit – El Universal

WASHINGTON As part of its full report on review of the economy of the single currency, the International Monetary Fund (IMF) lowered from 1.6% to 1.4% its forecast for 2017 economic growth in the euro area as a result of “negative impact” of the vote in favor of the departure of the United Kingdom of the European Union (EU), known as Brexit

This new estimate revised down two-tenths predicted in April and warned that if the current “risk aversion continues (…) the impact on growth could be higher”.

by 2018, expects growth to be 1.6% below 1.7% forecast three months ago .

the body led by Christine Lagarde, who had warned before the negative effects of a possible departure from the UK of the European bloc, justified this cut by “a likely weaker confidence of investors due to high uncertainty, higher volatility and lower demand for British imports “.

” this is a preliminary analysis, at this time is very difficult to say how long it will last this time, “said Mahmood Pradhan, director Deputy European department of the IMF.

“the uncertainty will persist until we clarify what the status of the new relationship between the UK and the EU,” said Pradhan.

recent days, the fund has stressed the need for “a smooth and predictable transition”, but even the details of the process of British withdrawal from the EU are unknown.

Before the vote, the IMF he stressed that the Brexit cause a spike in inflation, slowdown in growth and a depreciation of the pound.

from June 23, the date of the referendum, the pound has fallen around 10% against the dollar and is at the lowest in more than three decades in the US currency.

in the medium term the international body portends a scenario of “mediocre” growth for the euro zone, because deep scars of the crisis, as high levels of debt, high unemployment, especially among the younger population, and unresolved problems in the banking systems of several countries.

persist Pradhan stressed that the euro zone has “a decisive moment”.

for the manager, the confluence of “low inflation, weak investment, high unemployment and an aging population will continue to damage productivity and increases the risk . of stagnation “

it is expected that inflation in the euro zone close 2016 at 0.2% versus 0.3% forecast in April; and it will climb to 1.1% in 2017. In both cases, it is well below the annual target of 2% set by the European Central Bank (ECB).