Brexit has not only made Britain’s GDP weaker, the referendum’s aftershocks have brought about a sense of uncertainty over the global financial system. Furthermore, if Scotland decides to stick with EU, Britain may not be the same ever again.
Goldman Sach’s top economists have predicted that Britain is likely to enter into a recessions in the wake of its seismic decision to leave the European Union. The aftershock of that decision is not only denting its economic future but, in this world of connected economies, the outcome of its referendum is also likely to stunt global economic growth.
“We now expect the (British) economy to enter a mild recession by early 2017,” wrote Jan Hatzius Sven Jari Stehn, economists at Goldman in a note to clients.
According to them, the Brexit vote is likely to result in the erosion of 2.75% from the United Kingdom’s gross domestic product in a span of 18 months. The economies of the European Union and that of the United States will also suffer the knock-on effects.
After the Brexit vote, Goldman Sachs now expects the Eurozone’s GDP to grow at an average of 1.25% instead of the earlier 1.5%.
As for the U.S., Goldman Sachs expects its half yearly GDP growth to come in at around 2% against an earlier forecast of 2.25%.
According to the bank, Britain’s historic decision is likely to have 3 major consequences: its terms of trade with its partners are likely to deteriorate; companies are likely to cut back on their projected investments due to the aftershocks of Brexit which has created a sense of uncertainty and last financial conditions are likely to weaken due to varied fluctuations in bonds, forex and stocks.
Categories: Economy & Finance, Strategy
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