The International Monetary Fund lowered its forecast for global economic growth yet again Wednesday, citing the long shadow cast by Britain’s decision to leave the European Union. The fund now predicts the world economy will expand by 3.1 percent this year and 3.4 percent in 2017. Both estimates are down one-tenth of a percentage point compared to forecasts this spring. Britain is expected to experience the most dramatic consequences, with the IMF slashing its forecast by 0.2 percent to 1.7 percent this year and almost a full percentage point next year to 1.3 percent. The IMF’s chief economist, Maury Obstfeld, said that before the surprise outcome of Britain’s public referendum — popularly referred to as Brexit — the fund had expected to provide to increase, rather than decrease, its quarterly forecast of growth. Still, he acknowledged that Brexit so far has proven “relatively benign.” The assessment is a testament to the strength of financial markets despite the Shakespearean political drama unleashed after the vote that has unseated the nation’s top officials. Global stock markets have rebounded, with Wall Street setting record highs. The British pound has stabilized since sliding to the lowest level in more than three decades. Even in the banking sector, which bore the brunt of investor anxiety, share prices were pummeled, but no crisis has emerged.
Brexit is slowing world economy — and it could be worse
