Brexit is likely to have an adverse impact on India’s growth with domestic GDP expected to decline by up to 60 basis points in a high-stress scenario within the next two years, Morgan Stanley on Tuesday said in a report.
According to the global financial services major, with the UK's referendum to leave the European Union, the impact on Indian economy would be through trade and financial channels. However, it noted that owing to lower direct exposure in terms of exports to the UK, the Brexit impact would be ‘less’ as compared to other more open economies in the region.
“In a medium-stress scenario, we expect downside of 10-20 bp to GDP growth in the next two years, while in a high-stress scenario, we expect downside of 30-60bp to GDP growth,” Morgan Stanley said.