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

Big Wreck announces two Okanagan shows

The American-Canadian band will be playing in Vernon and Kelowna on Oct. 29 and Nov. 3

Kelowna fastpitch player en route to national championships

15 year-old Ryley Binne joins her White Rock team every weekend for tournaments

Kelowna paddling team raises breast cancer awareness for 20 years

“Bust ‘N Loose” cancer survivors take on the waters worldwide for breast cancer research

$100+ million condo development planned for West Kelowna

The project targets so-called “zoomers” (active baby boomers) downsizing from their traditional homes

Kelowna’s Across the Lake Swim sees biggest turn-out in 71 years

There were 1325 registered for this year’s iconic Okanagan Lake swim

VIDEO: Missing teens named as suspects in three northern B.C. killings

Kam McLeod and Bryer Schmegelsky are wanted in the deaths of Lucas Fowler, Chynna Deese, unknown man

Vehicle collides into Okanagan home and drives away

Fencing, landscaping suffer significant damage and minor injury to house on Vernon’s Okanagan Avenue

Countdown starts to 2020 BC Summer Games

Two flags unveiled at Maple Ridge city hall.

Serious injuries sustained in Highway 1 collisions west of Salmon Arm

Air ambulance needed at two accident scenes that closed highway Monday evening

Memorial bench painted by Vancouver woman to stay in park for now

Park board to look at options for artistic enhancements on commemorative benches

VIDEO: Man found dead near B.C. teens’ truck could be linked to a double homicide

RCMP said they are looking for Kam McLeod, 19, and Bryer Schmegelsky, 18, of Port Alberni

Weather Network’s anti-meat video ‘doesn’t reflect true story’: cattle ranchers

At issue is the video’s suggestion that cutting back on meat consumption could help save the planet

Hergott: Concerns with e-scooters

Lawyer Paul Hergott takes a look at the issues around e-scooters

VIDEO: Young couple found dead in northern B.C. had been shot, police say

Chynna Noelle Deese of the U.S. and Lucas Robertson Fowler of Australia were found along Highway 97

Most Read