IMF predicts weakest global growth in 3 years

Bloomberg

The International Monetary Fund (IMF) cut its forecast for the world economy, predicting it will grow at the weakest pace in three years in 2019 and warning fresh trade tensions would spell further trouble.
In its second downgrade in three months, the lender blamed softening demand across Europe and recent palpitations in financial markets. It predicts global growth of 3.5 percent this year, beneath the 3.7 percent expected in October and the rate in 2018.
“The world economy is growing more slowly than expected, and risks are rising,” Managing Director Christine Lagarde told reporters in Davos, Switzerland.
The outlook is perhaps more upbeat than that of many investors who openly fear a US-led slowdown taking hold. The fund left its projections for the US and China unchanged and even anticipates a pickup in worldwide expansion to 3.6 percent next year.
Risks nevertheless “tilt to the downside,” the IMF said in a report which came hours after China revealed the slowest expansion since 2009 last quarter. The IMF’s outlook will set the tone for this week’s World Economic Forum meeting in Davos.
“It is important to take stock of the many rising risks,” said Gita Gopinath, the fund’s new chief economist. “Given this backdrop, policymakers need to act now to reverse headwinds to growth and prepare for the next downturn.”
Threats cited in the report included more trade tariffs, a renewed tightening of financial conditions, a “no deal” Brexit and a deeper-than-anticipated slowdown in China.
Among major economies, the deepest revision was for Germany, which the IMF now sees expanding 1.3 percent this year, down 0.6 percentage point from October. Soft consumer demand and weak factory production after the introduction of stricter emission standards for cars were behind the shift.