Brexit fallout leads IMF to lower global growth forecast to 3.1% in 2016 & 3.4% in 2017

The close election and Brexit caused the Australian consumer confidence to go down 3 percent to 99.1 in July. However, on an international scale, the International Monetary Fund (IMF) says the decision by 52 percent of Britons to leave the European Union hardly dented its global growth forecast for 2016 and 2017.

For this year and next year, the IMF slightly cut its global growth forecast resulting from the Brexit by only 0.1 of a percentage to 3.1 percent for 2016 and 3.4 percent for 2017, reports ABC. Had Britons opted to remain, the IMF would have increased the growth forecasts.

"The Brexit vote implies a substantial increase in economic, political, and institutional uncertainty, which is projected to have negative macroeconomic consequences, especially in advanced European economies," the IMF explains in its latest World Economic Outlook Update.

Among nations, Brexit would hit hardest the UK and European economies. The Brexit vote translates into a 0.2 of a percentage point slower growth for the British economy in 2016 and 0.9 of a percentage point in 2017 to 1.3 percent. For the Eurozone, the IMF cut its growth forecast by 0.2 percentage point in 2017.

During the campaign period for the European Union referendum, the IMF warned of “a more disorderly outcome” from Brexit and provided two scenarios wherein global growth would further slow or stall, reports The Guardian.

It would not be Brexit that would have a bigger impact on the world economy, but the outlook for China and the US. The good news is that recent data indicate expansion in the two giant economies are holding up fairly well.

VIDEO: IMF cuts global growth forecast over Brexit