Europe's growth prospects are at risk from a more turbulent external environment with trade tensions and tighter financial conditions at the forefront of global headwinds, according to the latest regional outlook from the International Monetary Fund (IMF).
Downgrading its growth forecasts for Europe for 2018 and 2019, the IMF said Thursday that the "the external environment has become less supportive and is expected to soften further in 2019 owing to slowing global demand, trade tensions and higher energy prices."
Accordingly, growth is projected to moderate from 2.8 percent in 2017 to 2.3 percent in 2018 and 1.9 percent in 2019, the IMF noted.
"In the short term, escalating trade tensions and a sharp tightening in global financial conditions could undermine investment and weigh on growth," the IMF reported in its latest research.
In the medium term, meanwhile, risks stem from delayed fiscal adjustment and structural reforms, demographic challenges, rising inequality, and declining trust in mainstream policies.
Also, a "no-deal" Brexit would lead to high trade and non-trade barriers between the U.K. and the rest of the European Union with negative consequences for growth, the IMF stated. A "no-deal" Brexit is classed as where the country crashes out of the EU without a trade deal, and reverts to WTO rules.
Reference: CNBC
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