The International Monetary Fund on Tuesday cut its forecast for global economic growth for the next two years, citing the uncertainty created by the imminent departure of the United Kingdom of the European Union.
The IMF decision included a reduction of almost one percentage point in growth projections UK in 2017.
by reducing its projections of the World Economic Outlook for the fifth time in 15 months, the IMF said it now expects the Product Global gross domestic grow at a rate of 3.1% in 2016 and 3.4% in 2017, down 0.1 percentage point for each year compared to the estimate released in April.
the fund said that despite recent improvements in Japan and Europe and a partial recovery in prices of raw materials, the vote of “Brexit” in Britain had created “a significant increase in uncertainty” which would hit investment and consumer confidence and markets.
One day before the British referendum of June 23, the IMF was ready “to slightly improve projections of global growth in 2016 and 2017,” said chief economist Maury Obstfeld bank said in a statement. “But the Brexit came to complicate everything.”
The IMF said the impact of the British decision hit hardest the UK itself, whose 2016 growth forecast cut to 1.7% down 0.2 percentage points from the April estimate. It also reduced the GDP growth projection UK in 2017 more strongly, by 0.9 percentage points to 1.3%.
The IMF slightly increased its estimate for the economy euro zone in 2016, but cut its 2017 forecast by 0.2 percentage points to 1.4%.
the fund said the outlook for China remained broadly unchanged, with a small improving growth of 6.6% in 2016, but a slowdown to 6.2 percent in 2017.
recessions in Brazil and Russia will be less severe than previously predicted this year, partly due to some recovery in oil prices and other raw materials, the IMF said, adding that both countries will return to positive growth in 2017.
the fund urged strategists economic not to accept the slight growth rates as “a new normal” and said they should support demand in the short term and structural reforms that help growth in the medium-term policies.
the IMF he said he had been prepared to raise the prospects for Japan’s economic growth in 2017 by 0.4 percentage points from the delay in implementing a boost to consumption tax, but that number was cut in half by the continued appreciation in the yen’s value.
now expects growth in 2016 of 0.3% versus 0.5% previously estimated, while 2017 growth is barely in positive territory with 0 , 1%.
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