IMF's Global Gloom Falls Most Heavily on the U.K. Economy: Chart

The IMF says that Brexit is still " very much unfolding" and that the extent of political and economic uncertainty has risen.

The April outlook was for 3.2 per cent global output growth in 2016 and 3.5 per cent in 2017.

The IMF earlier downgraded its forecast for USA growth this year to 2.2 per cent, after the American economy got off to a slow start this year, partly because a strong dollar pinched exports.

Recessions in Brazil and Russian Federation will be less severe than previously forecast this year due partly to some recovery in oil and commodities prices, the International Monetary Fund said, adding that both countries will return to positive growth in 2017.

Among advanced countries, the U.K.'s growth expectation was revised down the most - to 1.7 percent from 1.9 percent for 2016, and to 1.3 percent from 2.2 percent for 2017.

The IMF warning is likely to be another spur to the Bank of England to cut rates next month as it tries to shore up the economy.The IMF said it had been looking to upgrade its global growth projections until the June 23 vote.

In the first, "downside" scenario, financial conditions are tighter and consumer confidence weaker than now assumed, both in the United Kingdom and the rest of the world, until the first half of 2017, and a portion of United Kingdom financial services gradually migrates to the euro area.

The forecast is the first from a heavyweight global body to assess the global impact of the Brexit vote - which has already prompted market turmoil including a plunge in the pound to 1985 levels against the U.S. dollar and a slump in banking shares.

The IMF also outlines two alternative scenarios where global confidence takes a greater hit after Brexit and growth falls further.In the worst scenario, growth in the advanced economies next year could drop below 1 per cent next year. Next year, Japan's economy, the world's third-largest, is expected to expand 0.1 percent, 0.2 percentage point more than predicted in April, due to postponement of the consumption tax increase. Its economy is now expected to contract by 1.8 per cent rather than grow by 2.3 per cent, a sharp revision that has followed the steep devaluation of the country's currency.

The IMF has praised the reform measures while insisting that more needs to be done.

China's growth forecast for 2016 is up 0.1 percentage point, to 6.6 percent, and is unchanged for 2017 at 6.2 percent.

"Our projections for other areas are little changed by Brexit". This deterioration reflects the expected macroeconomic consequences of a sizable increase in uncertainty, including on the political front.

"Stronger reliance on measures to support domestic demand, especially in creditor countries with policy space, would help reduce global imbalances while contributing to stronger world growth", it said.

Related news: