Global Growth Falls Below 3% in IMF Worst Case Scenario
The International Monetary Fund (IMF) published revised global economic growth projections. “Brexit has thrown a spanner in the works,” said IMF Chief Economist Maurice Obstfeld. In a hopeful scenario where the UK is able to establish a quick and favorable trade agreement with the European Union (EU) and avoid a “large increase in economic barriers,” the UK’s economy is expected to growth by 1.3 percent next year. That projection is down from forecasts made in April predicting 2.2 percent growth. Global growth expectations were also reduced from 3.5 percent to 3.4 percent.
The IMF explains, “The vote in the United Kingdom in favor of leaving the European Union adds significant uncertainty to an already fragile global recovery,” adding, “This erosion of confidence was reflected in a large initial sell-off in global financial markets, which has since partly reversed. But continuing uncertainty is likely to weigh on consumption and especially investment.”
The report continues, “The vote has caused significant political change in the United Kingdom, generated uncertainty about the nature of its future economic relations with the European Union and could heighten political risks in the European Union itself.” In a worst-case scenario projection, where the UK experiences a serious recession and loses many of its financial services jobs, the IMF said global growth could slow down to below three percent to 2.8 percent. The forecast is likely to reverse the recent rally in the British Pound over the past week.
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£1 GBP = $1.31 USD
€1 EUR = $1.10 USD
£1 GBP = €1.19 EUR
(as of 10:00 AM EST, 7/19/2016)
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