Eurozone will bolster global growth as Brexit hits UK economy, says IMF
The Washington-based organisation said Europe’s recovery had inspired a brighter outlook for the world economy.
An economic revival across the eurozone will bolster global growth as the UK economy stutters in the face of Brexit, according to the International Monetary Fund (IMF).
The Washington-based organisation said Europe’s recovery had inspired a brighter outlook for the world economy, as its resurgent performance spills across the globe.
However, the IMF pinpointed the UK as one of a small number of European countries where the forecasts had failed to improve, as Brexit looks set to weigh on growth.
In its latest regional economic outlook report, the IMF said: “There could be protracted policy and economic uncertainty on a broad range of issues for both the European Union and the United Kingdom, because of the complex and drawn-out process and compressed timeframe for negotiations on the post-Brexit economic relationship.
“If the United Kingdom leaves the European Union without an agreement, there will be a notable increase in trade barriers, potentially accompanied by disruption of services in various sectors, with significant negative impact on economic activity.”
Previously released forecasts from the IMF predict UK gross domestic product (GDP) to expand by 1.7% this year, slowing to 1.5% in 2018 before picking up to 1.6% in 2019.
Meanwhile, the eurozone is expected to expand at a faster rate of 2.1% in 2017, before easing to 1.9% in 2018 and 1.7% in 2019.
Focusing on Europe, the IMF said: “The European recovery is spilling over to the rest of the world, contributing significantly to global growth.
“In a few advanced and many emerging economies, unemployment rates have returned to pre-crisis levels. Most emerging market European economies are now seeing robust wage growth.”
The update comes as the latest data from the Office for National Statistics (ONS) showed the UK economy accelerated to 0.4% in the third quarter, with the lion’s share of the expansion coming from the services and manufacturing industries.
However, UK economic growth is still struggling to bounce back to levels seen in the final quarter of 2016 when GDP rose by 0.6%.