The International Monetary Fund (IMF) on Tuesday slashes its global economic growth forecast for 2018 and 2019 to 3.7 percent, down from its forecast of 3.9 percent for both years in April, citing trade tensions between the United States and various countries. 

The latest forecasts, released during the IMF and World Bank annual meetings held in Indonesian's Bali, is the first downgrade since 2016 by the institution. 

In its newly published World Economic Outlook (WEO) report, the IMF said world economy is set to soften in the medium term, mainly dented by the imposition of import tariffs by the US on a variety of imports that have taken a toll on global trade, as well as the tighter financial conditions and capital outflow pressure faced by the emerging economies. 

The IMF especially warned that escalating trade tensions and the potential shift away from a multilateral, rules-based trading system are key threats to the global outlook.

"Higher trade barriers would disrupt global supply chains and slow the spread of new technologies, ultimately lowering global productivity and welfare," said the IMF in the report. 

Although the US has reported strong economic performance so far this year, the IMF revised down its growth forecast for 2019 to 2.5 percent from the previously projected 2.7 percent due to its trade measures, especially the tariffs it slapped on 200 billion US dollars worth of Chinese goods since September. 

The IMF predicted the tax cuts that has fueled current US growth to unwind in 2020, and much of the US-China tariffs' impact on the two economies to be felt next year. 

"Trade measures implemented since April will weigh on activity in 2019 and beyond," it warned in the report. 

The Fund also cut China's 2019 growth forecast to 6.2 percent from 6.4 percent, citing the negative impact of the tariffs. It said growth in China will remain strong, but is projected to decline gradually. 

It left 2018 growth forecasts for the two countries unchanged, at 2.9 percent for the US and 6.6 percent for China.

The Eurozone's 2018 growth forecast was cut to 2.0 percent from 2.2 percent previously, with Germany particularly hard hit by a drop in manufacturing orders and trade volumes.

The IMF does not see a generalized pullback from emerging markets, nor contagion that will spill over to those emerging economies which have stronger economies and have thus far avoided major outflows, such as those in Asia and some oil exporting countries.

Some energy-rich emerging market countries have fared better, due to higher oil prices with Saudi Arabia and Russia seeing forecast upgrades.