IMF Downgrades Its Forecast For World Economic Growth In 2019

The International Monetary Fund (IMF) has cut its forecast for world economic growth in 2019, citing heightened trade tensions and rising U.S. interest rates.

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

For Canada, the IMF's estimate for growth in 2019 is now 1.9%, down from a forecast in October of 2% growth. The IMF's view is more positive than an assessment by the Bank of Canada issued on January 9. The central bank forecast growth of 1.7% this year, down from its October prediction of 2.1% growth.

The IMF expects the Chinese economy — the world's second biggest — to grow 6.2% this year, down from 6.6% in 2018 and the slowest since 1990. 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.

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.