The International Monetary Fund scrapped its forecast for a pickup in global growth this year, citing Britain's vote to leave the European Union, and warned the damage could worsen if confidence falters among investors and companies.
The IMF sees global gross domestic product rising 3.1 percent this year, down from April's 3.2 percent projection and equal to growth in 2015, according to the fund's quarterly World Economic Outlook, released Tuesday in Washington. The 2017 forecast was cut to 3.4 percent from 3.5 percent.
The IMF's new forecast is based on the assumption that British and EU officials reach new trade agreements that avoid a "large increase in economic barriers." However, if talks break down, Britain will slip into recession as more financial institutions relocate to the euro area and consumption and investment contract more than expected, the fund said. In a "severe" scenario, global growth is seen sliding to 2.8 percent this year and next.
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