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.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Comments are closed

Just Posted

Loaded gun, hundreds of rounds ammunition seized in Victoria

Victoria police focus on Project Burnside Gorge Connect

Saanich police break up Canada Day gathering of nearly 200 youth in Mount Douglas Park

Officers observed underage drinking, public intoxication, lack of physical distancing

Undercover operation exposes prominent human trafficking problem in Greater Victoria

VicPD’s Operation No More took place in mid-June at a local hotel

Sooke’s homeless reflect on housing situation

Ed MacGregor Park a new temporary home for Sooke’s homeless population

‘This year is unlike any other’: Trudeau delivers Canada day address

Sophie Gregoire Trudeau and the Prime Minister release video celebrating the national holiday

Major B.C. salmon farm tests new containment system to curb sea lice infestations

System “essentially eliminatates” contact between wild and farmed fish stocks, says Cermaq

Major B.C. salmon farm tests new containment system to curb sea lice infestations

System “essentially eliminatates” contact between wild and farmed fish stocks, says Cermaq

US unemployment falls to 11%, but new shutdowns are underway

President Donald Trump said the jobs report shows the economy is “roaring back”

Ottawa jail inmates argue anti-COVID measures a breach of charter rights

The prisoners allege guards did not wear masks until April 25

Epstein pal arrested, accused of luring girls for sex abuse

Ghislaine Maxwell was in an intimate relationship with Epstein for years

B.C. repairs COVID-19 emergency order for local government

Ombudsperson shut out as his recommendations implemented

No doctor assisted death allowed at Hamlets in Duncan

Faith-based company that owns facility believes in sanctity of life

More than 50,000 Coronavirus cases reported per day in US

Coronavirus cases are rising in 40 of 50 US states

Most Read