Data Drive: Brexit tremors

Updated: August 11, 2016 4:26 PM

Britain has voted to leave the European Union, causing jitters across financial markets. The referendum has put the country’s economy into deep uncertainty and its attractiveness to investors under question.

Britain has voted to leave the European Union, causing jitters across financial markets. The referendum has put the country’s economy into deep uncertainty and its attractiveness to investors under question.

Britain’s economy is likely to be hit as the UK government and the IMF estimate that GDP growth could be lower by anywhere between 1% to 3% in short term. Given that the EU is the main trading partner of the UK—47% of UK exports go to the EU—the immediate impact will be on trade. The bigger hit will come from a substantial reduction in foreign direct investment as the overall stock of FDI in the UK economy is estimated to be around 50-60% of GDP, according to a HDFC Bank note.

Also Read: How Brexit wrought carnage for India’s UK linked companies

The impact of Brexit will not be limited to the UK only. Britain’s exit from the EU will also affect the global economy, which is already going through a bad patch. The IMF has already curtailed its global growth forecast this year, projecting 3.2% this April, down from 3.8% projected in April last year.

 

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