Brexit has clearly been one of the most significant political and economic event of the year and has led to a lot of heartburn across the globe and today the International Monetary Fund (IMF) slashed the global rate of growth for the next two years in its latest forecast. In addition to that, the IMF has reduced the growth prospects of Great Britain by a whole percentage point and needless to say, the news has alarmed policy makers all across the world.
The details of the forecasts have been made plain in a Reuters report, "Cutting its World Economic Outlook forecasts for the fifth time in 15 months, the IMF said that it now expects global GDP to grow at 3.1 percent in 2016 and at 3.4 percent in 2017 -- down 0.1 percentage point for each year from estimates issued in April.The Fund said that despite recent improvements in Japan and Europe and a partial recovery in commodity prices, the UK's Brexit vote had created a "sizeable increase in uncertainty" that would take its toll on investment and market and consumer confidence.
On the day before Britain's June 23 EU referendum, the IMF was "prepared to upgrade our 2016-17 global growth projections slightly," IMF chief economist Maury Obstfeld said in a statement. "But Brexit has thrown a spanner in the works." The IMF said that the impact will hit hardest in Britain itself, where the institution cut its 2016 growth forecast to 1.7 percent, down 0.2 percentage points from its April forecast. It cut the 2017 UK forecast more sharply, by 0.9 percentage points, to 1.3 percent. The IMF lifted its euro zone forecast slightly for 2016, but cut its 2017 outlook by 0.2 percentage point to 1.4 percent for 2017."
Considering the fact that the latest report was going to spook the markets, the UK Treasury swung into action and a spokeswoman stated that the UK remains an open economy despite Brexit. She said, "Our absolute priority is to send a clear signal to businesses both here and across the world, that we are open for business and determined to keep Britain an attractive destination for investors from overseas,"