IMF revises down growth forecasts after Brexit

NEW YORK (AA) – Growth forecasts for advanced economies, the United Kingdom and euro area through 2017 were revised down after Britons voted to leave the EU, known as the Brexit, the International Monetary Fund (IMF) said Tuesday.

"The global outlook for 2016-17 has worsened," after Brexit, the IMF said, and added the vote to leave the EU creates "a sizable increase in uncertainty ... projected to take a toll on confidence and investment, including through its repercussions on financial conditions and market sentiment more generally."

As a result, the bank lowered its projection for global growth to 3.1 percent from 3.2 percent for 2016, and to 3.4 percent from 3.5 percent for 2017.

In addition, growth forecast for advanced economies were revised down to 1.8 percent from 1.9 percent for this year, and to 1.8 percent from 2 percent for next year.

Among advanced countries, the U.K.'s growth expectation was revised down the most -- to 1.7 percent from 1.9 percent for 2016, and to 1.3 percent from 2.2 percent for 2017.

"The increase in uncertainty following the referendum is projected to significantly weaken domestic demand," the IMF said of the U.K.

Meanwhile, it increased the growth outlook for euro area, to 1.6 percent from 1.5 percent for 2016, pointing out the region's growth came in higher than expected in the first quarter.

However, the 2017 growth projection of euro area was lowered to 1.4 percent from 1.6 percent, due to "the potential impact of increased uncertainty on consumer and business confidence," after the Brexit, the IMF said.

Growth projections for emerging market and developing economies were left unchanged at 4.1 percent for this year and 4.6 percent for next year.

The IMF noted that a more thorough assessment of the global outlook will be presented at its next World Economic Outlook report to be published in October.