The world economy is set to slow to its weakest rate of growth since the 2008-2009 global financial crisis and faces "elevated" risks, the International Monetary Fund (IMF) has said.
The IMF said its World Economic Outlook projections now suggest a 3 percent increase in the size of the global economy in 2019, down from the 3.2 percent predicted in July.
It said the change was largely the result of global trade frictions, including the US-China trade war.
But it noted the world faces heightened geopolitical tensions, including Brexit-related risks, which could further disrupt supply chains and hamper confidence, investment and growth.
The IMF's new managing director Kristalina Georgieva has said tariffs already announced by the US and China would cut global economic output by 0.8 percent – or $700 billion.
Kristalina Georgieva said tariffs announced by the US and China would cut global economic output by $700bn. (Credit: VCG)
The report urged policymakers to work to find resolutions to trade disputes.
"At three percent growth, there is no room for policy mistakes and an urgent need for policymakers to cooperatively de-escalate trade and geopolitical tensions," IMF chief economist Gita Gopinath said in her introduction to the latest forecasts.
On individual countries and regions, the IMF also cut forecasts for 2019:
US: Now forecast 2.4% growth, down from a forecast 2.6% in July
Euro area: 1.2%, down 0.1 percentage points
UK: 1.2%, down 0.2 percentage points
Germany: 0.5%, down 0.2 percentage points
France: 1.2%, down 0.1 percentage points
Italy: 0%, down 0.1 percentage points
Spain: 2.2%, down 0.1 percentage points
China: 6.1%, down 0.1 percentage points
Japan: 0.9%, unchanged on the July forecast
The Washington DC-based IMF warned in its twice-yearly report that some of the "biggest downward revisions" for growth this year were for Hong Kong SAR, South Korea, and Singapore, "a common factor being their exposure to slowing growth in China and spillovers from US–China trade tensions."
Hong Kong's economy has also been hit by protests there, with the IMF revising its 2019 GDP growth forecast for Hong Kong to 0.3 percent, from 3 percent in 2018.
The report noted that geopolitical tensions, including Brexit, "could lead to an abrupt shift in risk sentiment and expose financial vulnerabilities built up over years of low interest rates."
It added: "The risks from climate change are playing out now and will dramatically escalate in the future, if not urgently addressed."
Other major economies such as Brazil, India, Mexico, Russia and South Africa are slowing this year due to "idiosyncratic reasons" but are expected to recover in 2020.
"A notable feature of the sluggish growth in 2019 is the sharp and geographically broad-based slowdown in manufacturing and global trade," the IMF said, which, in addition to the higher tariffs and trade uncertainty, is the result of the contracting auto industry.