Chart: The Aftermath of the Brexit Vote
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Chart: The Aftermath of the Brexit Vote

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Chart: The Aftermath of the Brexit Vote

The Aftermath of the Brexit Vote

It’s been 3 months, and no signs of doom or gloom.

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

For the first half of the year, we were warned early and often by authorities that the Brexit vote could be a calamity for the ages.

For example, the IMF claimed that a “Leave” result would threaten to “cause severe damage”, while Standard and Poor’s said that it would “paralyze” investment in the UK.

But, it turns out that the real Brexit casualty isn’t the UK economy – instead it is the reputation of the many professional economists who wrongly predicted doom and gloom as the likely aftermath.

The Story So Far

Today’s chart looks at the three months before and after the Brexit vote, which took place on June 23, 2016.

The two charts tracked are the GBP/EUR and the FTSE 100. The former is the price of the British pound in terms of euros, and the latter is a major stock index that includes the largest companies listed in London, such as Barclays, Glencore, HSBC, Royal Dutch Shell, or Sainsbury’s.

As expected, both markets have seen some action in the aftermath of the vote to leave. The pound has depreciated in terms of euros, but it is still higher now than it was from 2009-2011 in the post-crisis period. Against the ultra-strong USD, the pound is at decade-lows – but many other currencies are in similar territory as well.

The FTSE 100 is another story. It’s relatively close to all-time highs – and even despite the fears of a potential collapse of Deutsche Bank, it’s climbed over 12% since the initial Brexit slump.

In both cases, the action was partly underscored by the Bank of England, which announced a new stimulus program (QE) after its August meeting, while cutting rates from 0.5% to 0.25%.

Other Indicators

While there’s been movement in the currency and equity markets, other economic indicators have been status quo or better for the UK so far.

Retail sales beat in July and August, and unemployment remains at 11-year lows. Purchasing manager indices dropped temporarily, but jumped back up.

The economists that predicted that the sky was falling? They’ve been forced to revise growth expectations back up, at least on a short-term basis. It’s been dubbed the “Brexit Bounce” by The Spectator, a conservative magazine based in London.

While there is likely still going to be some long-term fallout from the Brexit decision, many “experts” blew it on this one.

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Mapped: GDP Growth Forecasts by Country, in 2023

The global economy faces an uncertain future in 2023. This year, GDP growth is projected to be 2.9%—down from 3.2% in 2022.

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GDP Growth

Mapped: GDP Growth Forecasts by Country, in 2023

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Since Russia’s invasion of Ukraine early last year, talk of global recession has dominated the outlook for 2023.

High inflation, spurred by rising energy costs, has tested GDP growth. Tightening monetary policy in the U.S., with interest rates jumping from roughly 0% to over 4% in 2022, has historically preceded a downturn about one to two years later.

For European economies, energy prices are critical. The good news is that prices have fallen recently since March highs, but the continent remains on shaky ground.

The above infographic maps GDP growth forecasts by country for the year ahead, based on projections from the International Monetary Fund (IMF) October 2022 Outlook and January 2023 update.

2023 GDP Growth Outlook

The world economy is projected to see just 2.9% GDP growth in 2023, down from 3.2% projected for 2022.

This is a 0.2% increase since the October 2022 Outlook thanks in part to China’s reopening, higher global demand, and slowing inflation projected across certain countries in the year ahead.

With this in mind, we show GDP growth forecasts for 191 jurisdictions given multiple economic headwinds—and a few emerging bright spots in 2023.

Country / Region2023 Real GDP % Change (Projected)
🇦🇱 Albania2.5%
🇩🇿 Algeria2.6%
🇦🇴 Angola3.4%
🇦🇬 Antigua and Barbuda5.6%
🇦🇷 Argentina*2.0%
🇦🇲 Armenia3.5%
🇦🇼 Aruba2.0%
🇦🇺 Australia*1.6%
🇦🇹 Austria1.0%
🇦🇿 Azerbaijan2.5%
🇧🇭 Bahrain3.0%
🇧🇩 Bangladesh6.0%
🇧🇧 Barbados5.0%
🇧🇾 Belarus0.2%
🇧🇪 Belgium0.4%
🇧🇿 Belize2.0%
🇧🇯 Benin6.2%
🇧🇹 Bhutan4.3%
🇧🇴 Bolivia3.2%
🇧🇦 Bosnia and Herzegovina2.0%
🇧🇼 Botswana4.0%
🇧🇷 Brazil*1.2%
🇧🇳 Brunei Darussalam3.3%
🇧🇬 Bulgaria3.0%
🇧🇫 Burkina Faso4.8%
🇧🇮 Burundi4.1%
🇨🇻 Cabo Verde4.8%
🇨🇲 Cameroon4.6%
🇰🇭 Cambodia6.2%
🇨🇦 Canada*1.5%
🇨🇫 Central African Republic3.0%
🇹🇩 Chad3.4%
🇨🇱 Chile-1.0%
🇨🇳 China*5.3%
🇨🇴 Colombia2.2%
🇰🇲 Comoros3.4%
🇨🇷 Costa Rica2.9%
🇨🇮 Côte d'Ivoire6.5%
🇭🇷 Croatia3.5%
🇨🇾 Cyprus2.5%
🇨🇿 Czech Republic1.5%
🇨🇩 Democratic Republic of the Congo6.7%
🇩🇰 Denmark0.6%
🇩🇯 Djibouti5.0%
🇩🇲 Dominica4.9%
🇩🇴 Dominican Republic4.5%
🇪🇨 Ecuador2.7%
🇪🇬 Egypt*4.0%
🇸🇻 El Salvador1.7%
🇬🇶 Equatorial Guinea-3.1%
🇪🇷 Eritrea2.9%
🇪🇪 Estonia1.8%
🇸🇿 Eswatini1.8%
🇪🇹 Ethiopia5.3%
🇫🇯 Fiji6.9%
🇫🇮 Finland0.5%
🇫🇷 France*0.7%
🇲🇰 North Macedonia3.0%
🇬🇦 Gabon3.7%
Georgia4.0%
Germany*0.1%
Ghana2.8%
Greece1.8%
Grenada3.6%
Guatemala3.2%
Guinea5.1%
Guinea-Bissau4.5%
Guyana25.2%
Haiti0.5%
Honduras3.5%
Hong Kong SAR3.9%
Hungary1.8%
Iceland2.9%
India*6.1%
Indonesia*4.8%
Iraq4.0%
Ireland4.0%
Iran*2.0%
Israel3.0%
Italy*0.6%
Jamaica3.0%
Japan*1.8%
Jordan2.7%
Kazakhstan*4.3%
Kenya5.1%
Kiribati2.4%
South Korea*1.7%
Kosovo3.5%
Kuwait2.6%
Kyrgyz Republic3.2%
Lao P.D.R.3.1%
Latvia1.6%
Lesotho1.6%
Liberia4.2%
Libya17.9%
Lithuania1.1%
Luxembourg1.1%
Macao SAR56.7%
Madagascar5.2%
🇲🇼 Malawi2.5%
🇲🇾 Malaysia*4.4%
🇲🇻 Maldives6.1%
🇲🇱 Mali5.3%
🇲🇹 Malta3.3%
🇲🇭 Marshall Islands3.2%
🇲🇷 Mauritania4.8%
🇲🇺 Mauritius5.4%
🇲🇽 Mexico*1.7%
🇫🇲 Micronesia2.9%
🇲🇩 Moldova2.3%
🇲🇳 Mongolia5.0%
🇲🇪 Montenegro2.5%
🇲🇦 Morocco3.1%
🇲🇿 Mozambique4.9%
🇲🇲 Myanmar3.3%
🇳🇦 Namibia3.2%
🇳🇷 Nauru2.0%
🇳🇵 Nepal5.0%
🇳🇱 Netherlands*0.6%
🇳🇿 New Zealand1.9%
🇳🇮 Nicaragua3.0%
🇳🇪 Niger7.3%
🇳🇬 Nigeria*3.2%
🇳🇴 Norway2.6%
🇴🇲 Oman4.1%
🇵🇰 Pakistan*2.0%
🇵🇼 Palau12.3%
🇵🇦 Panama4.0%
🇵🇬 Papua New Guinea5.1%
🇵🇾 Paraguay4.3%
🇵🇪 Peru2.6%
🇵🇭 Philippines*5.0%
🇵🇱 Poland*0.3%
🇵🇹 Portugal0.7%
🇵🇷 Puerto Rico0.4%
🇶🇦 Qatar2.4%
🇨🇬 Republic of Congo4.6%
🇷🇴 Romania3.1%
🇷🇺 Russia*0.3%
🇷🇼 Rwanda6.7%
🇼🇸 Samoa4.0%
🇸🇲 San Marino0.8%
🇸🇹 São Tomé and Príncipe2.6%
🇸🇦 Saudi Arabia*2.6%
🇸🇳 Senegal8.1%
🇷🇸 Serbia2.7%
🇸🇨 Seychelles5.2%
🇸🇱 Sierra Leone3.3%
🇸🇬 Singapore2.3%
🇸🇰 Slovak Republic1.5%
🇸🇮 Slovenia1.7%
🇸🇧 Solomon Islands2.6%
🇸🇴 Somalia3.1%
🇿🇦 South Africa*1.2%
🇸🇸 South Sudan5.6%
🇪🇸 Spain*1.1%
🇱🇰 Sri Lanka-3.0%
🇰🇳 St. Kitts and Nevis4.8%
🇱🇨 St. Lucia5.8%
🇻🇨 St. Vincent and the Grenadines6.0%
🇸🇩 Sudan2.6%
🇸🇷 Suriname2.3%
🇸🇪 Sweden-0.1%
🇨🇭 Switzerland0.8%
🇹🇼 Taiwan2.8%
🇹🇯 Tajikistan4.0%
🇹🇿 Tanzania5.2%
🇹🇭 Thailand*3.7%
🇧🇸 The Bahamas4.1%
🇬🇲 The Gambia6.0%
🇹🇱 Timor-Leste4.2%
🇹🇬 Togo6.2%
🇹🇴 Tonga2.9%
🇹🇹 Trinidad and Tobago3.5%
🇹🇳 Tunisia1.6%
🇹🇷 Turkey*3.0%
🇹🇲 Turkmenistan2.3%
🇹🇻 Tuvalu3.5%
🇺🇬 Uganda5.9%
🇺🇦 UkraineN/A
🇦🇪 United Arab Emirates4.2%
🇬🇧 United Kingdom*-0.6%
🇺🇲 U.S.*1.4%
🇺🇾 Uruguay3.6%
🇺🇿 Uzbekistan4.7%
🇻🇺 Vanuatu3.1%
🇻🇪 Venezuela6.5%
🇻🇳 Vietnam6.2%
West Bank and Gaza3.5%
🇾🇪 Yemen3.3%
🇿🇲 Zambia4.0%
🇿🇼 Zimbabwe2.8%

*Reflect updated figures from the January 2023 IMF Update.

The U.S. is forecast to see 1.4% GDP growth in 2023, up from 1.0% seen in the last October projection.

Still, signs of economic weakness can be seen in the growing wave of tech layoffs, foreshadowed as a white-collar or ‘Patagonia-vest’ recession. Last year, 88,000 tech jobs were cut and this trend has continued into 2023. Major financial firms have also followed suit. Still, unemployment remains fairly steadfast, at 3.5% as of December 2022. Going forward, concerns remain around inflation and the path of interest rate hikes, though both show signs of slowing.

Across Europe, the average projected GDP growth rate is 0.7% for 2023, a sharp decline from the 2.1% forecast for last year.

Both Germany and Italy are forecast to see slight growth, at 0.1% and 0.6%, respectively. Growth forecasts were revised upwards since the IMF’s October release. However, an ongoing energy crisis exposes the manufacturing sector to vulnerabilities, with potential spillover effects to consumers and businesses, and overall Euro Area growth.

China remains an open question. In 2023, growth is predicted to rise 5.2%, higher than many large economies. While its real estate sector has shown signs of weakness, the recent opening on January 8th, following 1,016 days of zero-Covid policy, could boost demand and economic activity.

A Long Way to Go

The IMF has stated that 2023 will feel like a recession for much of the global economy. But whether it is headed for a recovery or a sharper decline remains unknown.

Today, two factors propping up the global economy are lower-than-expected energy prices and resilient private sector balance sheets. European natural gas prices have sunk to levels seen before the war in Ukraine. During the height of energy shocks, firms showed a notable ability to withstand astronomical energy prices squeezing their finances. They are also sitting on significant cash reserves.

On the other hand, inflation is far from over. To counter this effect, many central banks will have to use measures to rein in prices. This may in turn have a dampening effect on economic growth and financial markets, with unknown consequences.

As economic data continues to be released over the year, there may be a divergence between consumer sentiment and whether things are actually changing in the economy. Where the economy is heading in 2023 will be anyone’s guess.

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