Less Global Growth
By Isaac Cohen*
The International Monetary Fund has updated the World Economic Outlook, its flagship publication. The projection of world economic growth for this year and next is cut by 0.1 percent, to 3.1 percent and 3.4 percent, respectively, a downward revision of the last projections made last April.
This decrease is explained as a consequence of the “Brexit,” resulting from the British voters’ decision to leave the European Union. According to the Fund, the referendum result has caused “a substantial increase in economic, political and institutional uncertainty, which is projected to have negative macroeconomic consequences, especially in advanced European economies.”
Although it is still premature “to quantify potential repercussions,” the Fund admits that if it was not for Brexit, global growth projections could have remained close to the April forecast. Since February, there were indications of a recovery in financial markets and in some commodity prices.
For instance, oil prices were improving due to supply difficulties in Nigeria and Canada, while the first quarter slowdown in the US economy was compensated by improvements in the euro area and in some emerging market economies, such as India, China and Russia.
The projection of economic growth for this year in Latin America and the Caribbean is cut to -0.4 percent, with a projected contraction of -3.3 percent for Brazil and 2.5 percent growth in Mexico.
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.