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Jul 19, 9:20 AM EDT

IMF says Brexit will drag down world economic growth



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WASHINGTON (AP) -- Britain's decision to leave the European Union will reduce global economic growth this year and next, the International Monetary Fund says.

The IMF is shaving its estimate for worldwide growth to 3.1 percent this year and 3.4 percent in 2017. Both estimates are 0.1 percentage points lower than the bank's previous forecast in April.

IMF chief economist Maurice Obstfeld said the bank was prepared "as of June 22" - the day before Britain's vote - to slightly mark up its global forecast, citing unexpectedly strong growth in Europe and Japan and a partial rebound in global commodity prices. "But Brexit has thrown a spanner in the works," Obstfeld said.

Britain must now renegotiate its trade relationship with Europe, creating uncertainty that could erode consumer and business confidence and freeze investment.

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