IMF Cuts Global Growth Forecast Citing Brexit Blowback

The Brexit blowback is far from over. On Tuesday, the International Monetary Fund trimmed its global growth forecasts for the next couple of years, citing uncertainty regarding the U.K.’s departure from the European Union and its impact on the global economy.

The new estimate implies 3.1 percent growth rate for 2016 and a 3.4 percent rate for 2017, down from a previous forecast of 3.2 percent and 3.5 percent, respectively.

"The Brexit vote implies a substantial increase in economic, political, and institutional uncertainty, which is projected to have negative macroeconomic consequences, especially in advanced European economies," the IMF's World Economic Outlook Update said.

As one could expect, the British economy will be hit the hardest. The IMF now models 1.7 percent growth for this year, and 1.3 percent for next year, down from April’s forecast of 1.9 percent and 2.2 percent, correspondingly.

For the Euro area, the IMF boosted its forecast by 0.1 point this year, to 1.6 percent, but cut its 2017 estimate by 0.2 point, to 1.4 percent.

"Had it not been for Brexit, the IMF was prepared to leave its outlook for this year broadly unchanged as better-than-expected euro area performance offset disappointing U.S. first-quarter growth. The IMF also had been prepared to raise its outlook for 2017 slightly, by 0.1 percentage point, on the back of improved performance in a few big emerging markets, in particular Brazil and Russia," the IMF said.