2H economic outlook in post-Brexit world: Citi

SINGAPORE (July 1): While leading indicators support the notion that economic activity appears to have rebounded, the uncertainty brought about by the UK referendum outcome has raised the risk of a renewed global economic slowdown and financial market volatility, according to a Citi Research report dated Thursday.

And that uncertainty which manifested itself in the immediate aftermath of the referendum in the financial asset and credit markets, will continue to weigh on economic activity, particularly in the UK and the EU, says Citi.

In response, Citi has revised down UK GDP growth forecasts sharply by around 3 percentage points over three years and warns that the UK is likely to face a recession in 2H 2016. In the Eurozone, the research house expects GDP growth to be negatively affected by up to 1.0pp cumulatively over the next 3 years. The impact on non-EU countries is expected to be limited, with global growth forecast at 2.4% in 2016.

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