FILE- In this Sept. 19, 2018, file photo a worker browses his smartphone outside a construction site wall depicting the skyscrapers in the Chinese capital at the Central Business District in Beijing. After galloping along for the past two years, the global economy is showing signs of weakening, with the United States, China and Europe all facing the rising threat of a slowdown. Few economists foresee an outright global recession within the next year. But the synchronized growth that powered most major economies since 2017 appears to be fading. (AP Photo/Andy Wong, File)

World economy forecast to slow in 2019 amid trade tensions

For Canada, the IMF’s estimate for growth in 2019 was 1.9 per cent, down from expected global growth of 3.5 per cent

The International Monetary Fund has cut its forecast for world economic growth this year, citing heightened trade tensions and rising U.S. interest rates.

The IMF said Monday that it expects global growth this year of 3.5 per cent, down from 3.7 per cent in 2018 and from the 3.7 per cent it had forecast for 2019 back in October.

RELATED: Bank of Canada holds interest rate

Unveiling its forecasts at the World Economic Forum in Davos, Switzerland, the fund left its prediction for U.S. growth this year unchanged at 2.5 per cent.

For Canada, the IMF’s estimate for growth in 2019 was 1.9 per cent, down from a forecast in October for growth of 2.0 per cent.

The IMF’s view is more positive than an assessment by the Bank of Canada issued Jan. 9. The central bank forecast growth of 1.7 per cent this year, down from its October prediction of 2.1 per cent.

IMF’s growth outlook for the 19 countries that use the euro currency has been reduced to 1.6 per cent from 1.8 per cent.

Growth in emerging-market countries is forecast to slow to 4.5 per cent from 4.6 per cent in 2018. The IMF expects the Chinese economy — the world’s second biggest — to grow 6.2 per cent this year, down from 6.6 per cent in 2018 and slowest since 1990.

RELATED: Inflation rises as higher airfares, veggie prices offset cheaper gas

The World Bank and the Organization for Economic Cooperation and Development have also downgraded their world growth forecasts.

Rising trade tensions pose a major risk to the world economy. Under President Donald Trump the United States has imposed import taxes on steel, aluminum and hundreds of Chinese products, drawing retaliation from China and other U.S. trading partners.

“Higher trade uncertainty will further dampen investment and disrupt global supply chains,” said IMF chief economist Gita Gopinath.

Rising interest rates in the U.S. and elsewhere are also pinching emerging-market governments and companies that borrowed heavily when rates were ultra-low in the aftermath of the 2007-2009 Great Recession.

As the debts roll over, those borrowers have to refinance at higher rates. A rising dollar is also making things harder for emerging-market borrowers who took out loans denominated in the U.S. currency.

— With a file from The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

High winds could lead to dangerous snowmobiling conditions

Advice for staying safe on the mountains Family Day weekend

Clearwater Library hosting open house

Event takes place Feb. 15 from 2—4 p.m.

Road conditions for Feb. 15

Slippery sections on Highway 5

Man caught in fatal avalanche ID’ed as Alberta man in his 20s

Outdoor guides warn against high winds in the mountains Family Day weekend

VIDEO: Historic night in Red Deer as 2019 Canada Winter Games kicks off

Star-studded Opening Ceremony features athletes from across Canada

B.C. students win Great Waters Challenge video contest

Video, mural and song about saving the salmon claims the top prize

B.C. couple attacked with acid, slashed with knife in Vietnam

Warning, graphic images: Man has burns on 80 per cent of his body, slashed with knife

Flying squirrels found to glow pink in the dark, including two from B.C.

Squirrels from Hope and Abbotsford were included in the biologists’ database

Ontario police field complaints over Amber Alert for missing girl, 11, found dead

Some said the Amber Alert issued late Thursday for Riya Rajkumar disrupted their sleep

Names keep adding to vaccine petition started by B.C. mom

Maple Ridge mom started campaign to make vaccination a condition of attending school

Northern B.C. First Nation clan says ancient tools found at pipeline work site

Archeologists from the Smithsonian Institute estimate one of the stones found dates back up to 3500 years

Wilson-Raybould resignation stokes anger, frustration within veterans community

Liberals have had three veterans-affairs ministers — Kent Hehr, Seamus O’Regan and Wilson-Raybould

Most Read