A no-deal Brexit would have an economic impact far beyond Britain, according to the World Banks latest Global Economic Prospects report.
In its six-monthly report, the U.S.-based bank looks at the possible scenario of the U.K. crashing out of the EU without a trade agreement, and warns more broadly that a recovery in emerging markets and developing economies (EMDE) has lost momentum due to tightening global financing conditions and intensified trade tensions.
Specifically on Brexit, the World Bank says a no-deal exit “is a risk to the UK and to Europe and any region that trades heavily with them. It means that countries in Eastern Europe, like Moldova and as far away as Georgia, and those in North Africa will be affected,” said Franziska Ohnsorge, the reports author.
The report warns that disorderly financial market developments could prove harmful to activity in the affected economies, leading to contagion effects. It predicts an escalation of trade disputes.
The bank forecast a drop in global average economic growth to 2.9 percent this year and 2.8 percent in 2020, from 3 percent in 2018.