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Brexit Unlikely to Hurt U.S. Credit Unions: Economists.

Byline: David Baumann

As financial markets were thrown into turmoil Friday as a result of the United Kingdom's decision to leave the European Union, credit union economists remained confident the chaos won't affect their predictions for a healthy year.

"Our outlook for credit union financial operations is essentially unchanged compared to our view prior to the Brexit vote," CUNA economists said.

Leading stock indexes plunged Friday following the British vote, with the Dow Jones industrial average falling more than 500 points shortly after it opened.

"For the U.S. economy, Brexit will at the very least lead to increased volatility in financial markets," NAFCU Chief Economist Curt Long said.

Economists had been predicting that the economy is likely to grow by 2% to 5% this year. That likely would allow credit unions to concentrate on core businesses and refrain from making drastic changes to their operations, they said.

Despite Friday's turmoil, Brexit is unlikely to have a lasting impact on the U.S. economy, Brian Turner, president of Meridian Economics, a Plano, Texas-based firm, said.

Once U.S. markets move on from their initial reaction, they once again will regain their balance, he added.

"This could take two days, two weeks or two years," Turner said. "In the meantime, the U.S. economy is completely focused on its own recovery and where remedies are more internal than external."

Credit unions should prepare for the present interest rate environment to last for some time, Long said.

"Normalization is bound to proceed on an even more gradual path than the Fed has previously indicated," he said. "Credit unions are also likely to see a repeat of the second half of last year when market volatility led to a surge in share growth."

Credit union members are likely to be a bit more cautious and some institutions might see above-normal flows into savings accounts, CUNA economists said.

"However, our view still calls for double-digit growth in credit union loans in 2016, healthy earnings and improving asset quality," they said.

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Publication:Credit Union Times
Date:Jun 24, 2016
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