WASHINGTON, United States (CMC) — The International Monetary Fund (IMF) has cut its forecasts for economic growth in Latin America and the Caribbean over the next two years as the unexpected United Kingdom vote to leave the European Union creates a wave of uncertainty amid already-fragile business and consumer confidence.

“The Brexit vote implies a substantial increase in economic, political, and institutional uncertainty, which is projected to have negative macroeconomic consequences, especially in advanced European economies,” according to the IMF’s World Economic Outlook Update.

“Brexit has thrown a spanner in the works,” said Maurice Obstfeld, IMF chief economist and economic counsellor.

According to the IMF, economic growth projections for Latin America and the Caribbean in 2016 and 2017 were 0.4 and 1.6 per cent respectively.

But the Washington-based financial institution said now that the growth has declined to 0.1 per cent for both years.

The IMF said that the economies of the United Kingdom and Europe will be hit the hardest by fallout from the June 23 referendum, which prompted a change of government in Britain.

“Global growth, already sluggish, will suffer as a result, putting the onus on policy makers to strengthen banking systems and deliver on plans to carry out much-needed structural reforms,” the IMF’s World Economic Outlook Update noted.

It said the global economy is projected to expand 3.1 per cent this year and 3.4 per cent in 2017, representing a 0.1 percentage point reduction for both years relative to the IMF’s April World Economic Outlook.

Had it not been for Brexit, the IMF said it was prepared to leave its outlook for this year broadly unchanged as better-than-expected Euro area performance offset disappointing US first-quarter growth.

At the end of their annual summit in Guyana earlier this month, Caribbean Community (CARICOM) leaders noted that “as expected the implications of Brexit for the Community was discussed although that situation unfolds daily.

“We are confident that the United Kingdom and the European Union will remain strong and valued partners of the Caribbean Community,” said CARICOM Chairman and Dominica’s Prime Minister Roosevelt Skerrit.