Brexit to have negative repercussions globally: IMF

Brexit vote has created significant uncertainty, likely to dampen growth in the near term.

The Dollar Business Bureau 

The International Monetary Fund said on Thursday that the decision of the UK to leave the European Union will have negative repercussions beyond UK to the global economy.

Brexit may have a negative impact on growth in the short-term, said Gerry Rice, IMF spokesperson. He also prodded the decision makers to act decisively when dealing with the situation.

Rice said, “Brexit vote has created significant uncertainty, and we believe this is likely to dampen growth in the near term, particularly in the UK, but with repercussions also for Europe and the global economy.”

He further said that the policy makers are required to be ready to take decisions, if effects of the turbulence in financial market and high uncertainty would hit the materially weak nations.

Rice stated that the IMF sees the short-term impact on the UK, the EU and the world economy as mainly due to the impact on macro-economic and financial market, and a considerable rise in uncertainty, comprising the political front. 

“One important source of the given uncertainty, concerns the future relationship terms between the EU and the UK. These put up the questions about how much time it will take to come on those terms, how the new ties will have an effect on the business and other stakeholders,” he said.

The IMF has also motivated the EU as well as the UK to work together for a smooth and calculated transaction.

Rice pointed out that IMF is strongly in favour of the commitments made and measures taken by the leading central banks that include the European Central Bank, Bank of Japan, Bank of England, the US Fed, and many others, to offer liquidity and to restrain extra financial volatility.

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The Dollar Business Bureau - Jul 01, 2016 12:00 IST