Brexit drives global growth forecast down
19 de julho de 2016
São Paulo – The International Monetary Fund (IMF) slashed its forecasts for the growth of the global economy for this year and the next after the referendum that decided for the United Kingdom to leave the European Union held on June 23. According to the most recent update of the report World Economic Outlook, released this Tuesday (19), the global Gross Domestic Product (GDP) is expected to grow 3.1% in 2016 and 3.4% in 2017. In both cases, the forecasts were cut down 0.1 percentage point from April’s estimates.
For the Fund, the option of the British for Brexit – the United Kingdom’s vote to leave the EU – was unexpected and implies “a substantial increase in economic, political and institutional uncertainty, which is projected to have negative macroeconomic consequences, especially in advanced European economies”. The organization says that it’s hard to predict Brexit’s potential effects since the process is still ongoing.
In the specific case of Great Britain, the IMF expects 1.7% growth for this year and 1.3% for the next, down 0.2 and 0.9 percentage point, respectively, from April’s forecasts. For the Euro Zone, however, the Fund revised up the 2016 forecast in 0.1 percentage point to 1.6%, while the estimate for 2017 was cut down 0.2 percentage point to 1.4%.
The IMF points out that if not for the Brexit victory in the referendum, forecasts of the current report would be similar to April’s, bringing even a slight increase of 0.1 percentage point in the global growth’s forecast for 2017 due to an improvement of emerging economies, especially Brazil and Russia.
Brazil and the Middle East
In the case of Brazil, the Fund says that consumer and business confidence “appears” to have bottomed out, and the GDP contraction in the first quarter was milder than anticipated. “Consequently, the 2016 recession is now projected to be slightly less severe, with a return to positive growth in 2017”, says the report.
Besides Brexit, the IMF lists other “risks” that can impact global economy’s performance, such as “geopolitical tensions and terrorism”, especially in the Middle East. However, even with the instability in the region’s countries, the institution increased in 0.3 percentage point the forecast for the bloc’s growth in 2016 to 3.4%. For 2017, however, the forecast was cut down 0.2 percentage point to 3.3%. The forecasts include the Middle East, North Africa, Afghanistan and Pakistan.
For Saudi Arabia, the only Arab nation to be a member of G20, the IMF kept the growth forecast for 2016 in 1.2% and increased next year’s in 0.1 percentage point to 2%. “In the Middle East, oil exporters are benefiting from the recent modest recovery in oil prices while continuing fiscal consolidation in response to structurally lower oil revenues, but many countries in the region are still plagued by strife and conflict”, says the report.
In this scenario, the Fund advises the countries in general the adoption of measures to strengthen the banking system and structural reforms. For the advanced economies, the IMF advises “a combination of near-term demand support and structural reforms to reinvigorate medium-term growth”.
*Translated by Sérgio Kakitani