The UK will still be the fastest growing G7 economy in the world this year despite the Brexit vote, according to the International Monetary Fund.
Global growth will slow to 3.1% in 2016 before recovering to 3.4% in 2017, it predicted. The IMF said it had taken a more subdued view since the UK referendum in today’s updated World Economic Outlook, with downward pressure on global interest rates.
The UK economy is predicted to rise by 1.8%, a 0.1% improvement since the prediction in July. The report said the reaction to Brexit was “reassuringly orderly” but the ultimate impact remained unclear.
Here’s my reaction to the IMF World Economic Outlook, published today. pic.twitter.com/ZT461SzyOU
— Philip Hammond (@PHammondMP) 4 October 2016
Asked about Brexit in a press conference today, IMF chief economist Maurice Obstfeld said: “In the event the market response was much more favourable than anybody could have anticipated. Markets stabilised very quickly. Had they not it could have triggered a more dramatic downturn, not just for Europe but for the US.”
He said there had been a “soft-landing” for the UK. He was happy about the outcome and said the IMF had come up with different scenarios, not just presenting the risks, but he said it was still difficult to tell how the negotiations over Brexit would go.
Chancellor Philip Hammond said today: “There are still challenges ahead, as the IMF notes in its estimate for growth in 2017. That is why I stand ready to take action to support our economy through any period of turbulence, and will continue to pursue the long-term goals of fiscal consolidation and improved productivity.”
Other predictions:
| World Economic Outlook Projections (% change) |
|||
|---|---|---|---|
| 2015 | 2016 | 2017 | |
| World output | 3.2 | 3.1 | 3.4 |
| Advanced economies | 2.1 | 1.6 | 1.8 |
| USA | 2.6 | 1.6 | 2.2 |
| Euro Area | 2 | 1.7 | 1.5 |
| Germany | 1.5 | 1.7 | 1.4 |
| France | 1.3 | 1.3 | 1.3 |
| Italy | 0.8 | 0.8 | 0.9 |
| Spain | 3.2 | 3.1 | 2.2 |
| Japan | 0.5 | 0.5 | 0.6 |
| UK | 2.2 | 1.8 | 1.1 |
| Canada | 1.1 | 1.2 | 1.9 |
| Other advanced | 2 | 2 | 2.3 |
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