IMF warns of Brexit global hit as Irish growth expected to ease
Published 01/07/2016 | 02:30
Cantor Fitzgerald has lowered Ireland's growth forecasts for the coming years on the back of the Brexit vote, as the International Monetary Fund warned the uncertainty the result created is the biggest risk to the global economy.
It came as ratings giant S&P downgraded the EU's credit rating yesterday on the back of the vote.
It follows Wednesday's announcement by the Central Bank of Ireland that it would be revising its economic forecasts.
Bank of England Governor Mark Carney yesterday moved to reassure investors and the public that the regulator would act to deal with the fallout from Brexit, but warned uncertainty could hurt the UK economy.
The pound - which had steadied in recent days, weakened amid speculation Mr Carney could ultimately announce a cut in interest rates, after strengthening in the wake of the surprise announcement that Boris Johnson would not be standing for Prime Minister.
By contrast, stock markets increased on the back of Mr Carney's speech and the suggestion that monetary policy could be eased over the summer months in a bid to shore up the Brexit-hit UK economy.
The FTSE reached a 10-month high, closing up over 2pc, while the ISEQ finished almost 1pc higher.
However, a number of global voices continued to warn about the impact of last week's vote.
The International Monetary Fund said uncertainty over Britain's looming departure from the EU will dampen near-term economic growth for the UK and the rest of Europe, and will also affect output globally.
Credit Suisse warned that global growth would shrink as a result of the Brexit vote, and billionaire investor George Soros said the vote had unleashed a financial markets crisis, similar to what happened in 2007 and 2008.
Cantor Fitzgerald Ireland said the market reaction to the vote had been "more contained" than had been anticipated.
Nonetheless, it cut its growth forecasts for Ireland this year to 3.8pc from 4.4pc, and for next year to 2.4pc from 3.8pc.
"We have revised our Irish growth forecasts lower for the next three years," Cantor said.
But it remained upbeat on the strength of the Irish economy. "Strong growth over the last two years has created significant buffer room for Ireland to help withstand this external shock," it said.
In its latest bi-monthly research report, leading commercial property agents CBRE said that while the UK's decision to vote in favour of Brexit had always been a "distinct possibility", the result announced last week "took the commercial real estate world by surprise".
In a general comment on the UK electorate's decision, CBRE said it would be some time before there is clarity on how the Irish economy - and in turn the real estate sector - will be affected by what it described as "this unexpected development".
Meanwhile, Slovak finance minister Peter Kazimir has said Brexit will be "no fun" for his Irish counterpart Michael Noonan, but said it would not prove fatal for the Eurozone economy.
"I can imagine for Michael Noonan this is going to be a problem," said Mr Kazimir, whose country is taking over the EU's rotating presidency today. "It is not fun for countries in this corner of Europe."