The International Monetary Fund has lowered its global economic growth forecast for 2016, citing risks to emerging markets due to a slowing Chinese economy.
The Washington-based Fund said Tuesday it believes the world economy will grow 3.4 percent in 2016 and 3.6 percent in 2017, two-tenths of a percentage point lower than previous estimates.
The IMF is maintaining its prediction that China's economy will grow 6.3 percent this year, then slow to 6.0 percent in 2017, as Beijing struggles to move from an investment and export-driven economy to one driven by consumer demand.
Other emerging markets affected
The switch will affect resource-rich nations such as Brazil, whose economies grew due to China's huge demand for raw materials.
Global markets have been rocked during the first three weeks of 2016 due to worries over China's economic slowdown and ever-falling oil prices.
"The coming year is going to be a year of great challenges," says IMF economist Maurice Obstfeld.
The Fund is predicting the U.S. economy will grow 2.6 percent for both 2016 and 2017, down 0.2 percent from its October forecast, thanks to a strong U.S. dollar which is causing the nation's manufacturing sector to shrink.