The International Monetary Fund has cut its forecasts for global economic growth this year and next following the UK’s vote to leave the EU.
The Fund says the poll result has created a wave of uncertainty amid already-fragile business and consumer confidence.
“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,” according to the IMF’s World Economic Outlook Update.
The report predicted that the economies of the UK and Europe will be hit the hardest by fallout from the June 23 referendum.
But global growth, already sluggish, will suffer as a result, putting the onus on policy makers to strengthen banking systems and deliver on plans to carry out much-needed structural reforms.
The IMF projects the global economy to expand 3.1 percent this year and 3.4 percent in 2017. These forecasts represent a 0.1 percentage point reduction for both years relative to the IMF’s April World Economic Outlook.
The UK economy will expand 1.7 percent this year, the IMF said, 0.2 of a percentage point less than forecast in April. Next year, growth is projected to slow to 1.3 percent, down 0.9 point from the April estimate and the biggest reduction among advanced economies.