In its latest global growth forecasts, NAB Group Economics has revised down its UK year-average GDP growth forecasts in the wake of the UK vote to leave the European Union.
The short-term result of Brexit is likely to be a "shallow" or technical recession (ie, two quarters of negative GDP growth), said NAB.
"By itself, a UK slowdown has relatively little impact on global growth," said the report. "The main risk to global growth comes from the extent to which financial market disruptions and uncertainty also impact other countries, in particular the rest of Europe."
In a scenario modelled by NAB, a "spillover" to Europe would lead to a peak decline in world GDP of 0.5 per cent relative to the baseline scenario.
"The impact on Australia is small; the ‘spillover’ scenario generates a depreciation of the Australian dollar which limits the impact on real GDP growth," said NAB.
"That there would be some impact on the EU outside of direct trade impacts would be expected.
"While it was the UK’s decision to leave, the rest of the EU now (involuntarily) faces the prospect of being in a smaller trading bloc, with some of the same negative consequences," said the report.