The International Monetary Fund again reduced its global economic growth forecast for 2019 on Tuesday, citing risks like increasing trade tensions and tighter monetary policy by the Federal Reserve.
The fund said in expects the world economy to grow by 3.3% this year. That’s down 0.4 percentage points from its previous outlook of 3.5%, which was also a downgrade. The IMF added it expects the economy to expand by 3.6% in 2020, however.
The IMF’s report comes as the Congress struggles to pass the United States-Mexico-Canada Agreement (USMCA), a trade deal signed by President Donald Trump and his Mexican and Canadian counterparts at the time, which would replace the existing North Atlantic Free Trade Agreement (NAFTA). Meanwhile, the Trump administration tries to hammer out another trade deal with China.
“The balance of risks remains skewed to the downside,” the IMF said. “Failure to resolve differences and a resulting increase in tariff barriers above and beyond what is incorporated into the forecast would lead to higher costs of imported intermediate and capital goods and higher final goods prices for consumers.”
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