IMF worries on China and Brexit

International Monetary Fund (IMF), in its World Economic Outlook, released Tuesday, downgraded global growth by 0.2% to 3.2% for 2016. This is the fourth time IMF has revised growth down for 2016. Compared to its January forecast, in April forecast for 2016, IMF has revised growth down by 0.2% in U.S., Germany, advanced economies and emerging market economies. UK and Brazil’s growth were revised down by 0.3%. Japan growth got revised down by 0.5% and Russia’s by 0.8%. China’s growth was revised up by 0.3%.

While IMF warned on slower growth in global economy and called for multilateral policy intervention to boost it, it expressed little worries over financial crisis.

Nevertheless, it lists two major events in its global risk list – one being Chinese shift from investment driven to consumption fuelled economy and other is Brexit.

IMF described the exit possibility as real, and warned that it poses risks to both EU and Britain, unlike many other who would make you believe that damage is to UK only. Europe’s recovery is already fragile and we believe, Britain’s exit would not only deteriorate growth but will bring back focus to Euro Zone crisis. Many economies in Eurozone hasn’t utilized the time earned by policies of ECB to improve upon the weakness.

Moreover, we feel, UK’s exit would do long term permanent damage to EU.