The IMF left its forecast for a recovery in global growth this year, citing the vote of the Great -Bretagne to leave the European Union, and warned the damage could worsen if confidence falters between investors and companies.
IMF sees global GDP up 3.1 percent this year, down from 3.2 percent projected in April and equal to the growth in 2015, according to the quarterly Global Economic Outlook funds, released Tuesday in Washington. Forecasts 2017 was reduced to 3.4 percent from 3.5 percent.
new IMF forecast is based on the assumption that the British officials and EU reach new trade agreements that avoid a "sharp increase in economic barriers." However, if the talks break down, Britain will slip into recession as other financial institutions move in the euro area and consumption and more than expected investment contract, the fund said. in a "severe" scenario, global growth is seen slipping to 2.8 percent this year and next.
"the real effects of Brexit will gradually play over time, adding to economic and political uncertainties which could be resolved only after several months, "said the IMF chief economist Maurice Obstfeld in the text of remarks to a press conference Tuesday.
fourth Downgrade
fund based Washington said it planned to update its global outlook modestly before Brexit vote, that the activity in China came in stronger than expected and recessions in Brazil and Russia were less severe than expected . Instead, the IMF cut its global forecast 2016 for a fourth time.
At present, the IMF still expects the UK economy to grow by 1.7 percent this year, compared to a projection of 1.9 percent in April. The Fund reduced its forecast for UK growth in 2017 by 0.9 percentage point to 1.3 percent.
The IMF said the impact of Brexit will be concentrated in advanced European countries, with a muted effect on other countries, including the US and China.
market reaction was initially "severe but generally orderly" Brexit the referendum on June 23, the IMF said. The pound has fallen about 12 percent against the dollar since the vote, while as demand strengthened for safe-haven assets such as US Treasuries. But global stock markets have largely recovered after an initial selloff, with the S & P 500 surging to a record high.
the IMF reiterated a forecast in June for the US economy to expand 2.2 percent this year and a projection earlier this month for growth of 1.6 percent in the euro area.
damage Yen
the fund sees the Japanese economy growing 0.3 percent this year, down 0.2 percentage points from the April projection, the appreciation of the yen erases the benefits of a delay in the tax increase on the nation's consumption.
The IMF raised its growth forecast for China this year to 0.1 percentage point to 6.6 percent, noting that almost the nation -term outlook has improved recent stimulus measures .
The Fund improved its outlook for Brazil and Russia, although both economies are expected to shrink further this year. The IMF has lowered its forecast sharply for Nigeria, the largest economy in Africa, struggling with shortages of foreign currency due in part to the decline in oil revenues. Nigeria's economy will shrink 1.8 percent this year, the IMF said, compared with a forecast in April for an expansion of 2.3 percent.
Obstfeld said a decline in global production potential caused by demographic and technological trends could trigger a "vicious circle" of weak demand and economic potential slippage. Slow growth will exacerbate social tensions caused by trends such as the stagnation of long-term wages, he said.
Not to mention the names of political candidates or specifying election campaigns, Obstfeld urged policy makers and political leaders to lean against "popular" rants against global markets.
"These constraints contribute to the demand for solutions that aim to reverse the long-term global trends to the detriment of open and dynamic markets which recorded a growth in worldwide throughout inward most of the postwar period, "said Obstfeld. It is up to policy makers and political leaders "to offer a story about these long-term developments to counter popular blaming all ills on the markets focused on the world."
Bloomberg
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