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

Just Posted

Alert Bay resident carves tribute to his community kicking COVID-19’s butt

‘Our little village crushed the curve with love and commitment’

Vancouver Island’s current COVID-19 case count officially hits zero

Of the 130 recorded Island Health cases, five people have died, 125 recovered

Port Hardy called in record number of black bear sightings last year

Conservation Officers attended 74 of the 314 calls made

North Island recreation camping site closed due to vandalism

Ruined picnic tables are the main damage

Port McNeill’s outdoor swimming pool will stay closed this summer

The Town of Port McNeill typically hires 12-13 staff for the pool every year.

‘I’m pissed, I’m outraged’: Federal minister calls out police violence against Indigenous people

Indigenous Minister Marc Miller spoke on recent incidents, including fatal shooting of a B.C. woman

Kelowna Mountie who punched suspect identified, condemned by sister

‘How did he get away with this? How is this justifiable?’

PHOTOS: Anti-racism protesters gather in communities across B.C.

More protests are expected through the weekend

Pair accused of ‘horrific’ assault at Vancouver’s Oppenheimer Park at large

Police say Jason Tapp, 30, and Nicole Edwards, 33, did not show up to meet their bail supervisor this week

No charges to be laid against 22 northern B.C. pipeline protesters

Twenty-two people were arrested in February, but Crown has decided not to pursue charges

Plan in place for BC Ferries to start increasing service levels

Ferry corporation reaches temporary service level agreement with province

B.C. starts to see employment return under COVID-19 rules

Jobless rate for young people still over 20% in May

End of an Era: Tofino hair studio closes shop

“We were getting excited to start ramping up and then all of sudden we had to close our doors.”

Most Read