Published: Wed, January 23, 2019
Markets | By Erika Turner

Stock markets slip amid signs global economy is weakening

Stock markets slip amid signs global economy is weakening

It also lowered the economic growth forecast for next year to 2.2 per cent from the 2.5 per cent it previously predicted.

Homebuilders sank after United States home sales cratered in December and price growth declined to the lowest level in more than six years. Despite the fiscal stimulus that offsets some of the impacts of higher U.S. tariffs, China's economy will slow down due to the combined influence of needed financial regulatory tightening and trade tensions with the US.

The IMF's growth outlook for the 19 countries that use the euro currency has been reduced to 1.6 per cent from 1.8 per cent.

"I am not sure why there isn't just as much attention on Europe".

China released its fourth-quarter (2018) GDP figures yesterday, showing that its economic growth had slowed to 6.4 per cent (since the December 2017 quarter).

However, the world´s two largest economies, now the source of most of the risk to global growth, did not see further downward revisions. For the eurozone, growth was switched down from 1.8 percent in 2018 to 1.6 percent in 2019, 0.3 percent lower than projected three months ago.

"After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising", said IMF Managing Director Christine Lagarde as she presented the forecasts at the World Economic Forum in Davos, Switzerland. In advanced economies, growth, is projected to slow from an estimated 2.3 percent in 2018 to 2.0 percent in 2019 and 1.7 percent in 2020.

International Monetary Fund has projected average oil prices at just below $60 per barrel in 2019 and 2020 (down from about $69 and $66, respectively, in the last WEO).

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"Risks to global growth tilt to the downside".

He said: 'These developments threaten to fragment the worldwide order that has governed the global economy.

Canada exports many commodities, including oil, so its economy could be hurt by a slowdown in the global economy.

The Fund expects global growth of 3.5 per cent this year and 3.6 per cent the next, down from a previous prediction of 3.7 per cent in both years.

"China's growth slowdown could be faster than expected especially if trade tensions continue, and this can trigger abrupt sell-offs in financial and commodity markets" - something that happened when Chinese growth sputtered in 2015, said International Monetary Fund chief economist Gita Gopinath.

The group commented: "As of mid-January, the shape that Brexit will take remains highly uncertain". Most 10-year yields were down two basis points on the day with Germany's at 0.225 percent compared to Friday's one-month high close to 0.28 percent.

During an interview with FOX Business on Friday, White House Economic Council Director Larry Kudlow admitted that trade talks with China would impact both the us and world economies.

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