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July 25, 2016

International Monetary Fund: British Exit From European Union Will Slow Global Growth

The International Monetary Fund (IMF) last week issued its updated economic growth estimates for the global economy. The IMF now expects 3.1 percent growth worldwide this year, down from its previous 3.2 percent estimate, issued in April, and 3.4 percent growth in 2017. (That latter figure is down from the previously-estimated 3.5 percent growth rate.) 

The report attributed the lower estimate to Britain’s exit (Brexit) from the European Union; IMF officials said that, prior to Brexit, they had been preparing to raise global growth estimates. Canadian Business explained the change, noting “Britain must now renegotiate its trade relationship with Europe, creating uncertainty that could erode consumer and business confidence and freeze investment.” 

The IMF also downgraded its expected growth rate for Canada for 2016, from 1.5 percent to 1.4 percent, but improved its expectations for 2017, from 1.9 percent growth to 2.1 percent. (Last month, the IMF announced it had lowered its estimate for U.S. growth in 2016, from 2.4 percent to 2.2 percent, but held steady its predictions for 2017 at 2.5 percent.) 

The IMF also predicts the Chinese economy will expand 6.6 percent this year, up from its earlier estimate of 6.5 percent.