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."
"Tighter financial conditions in vulnerable emerging market economies and maturing business cycles are also weighing on activity."
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.
That said, growth is expected to remain above potential in most countries in the region driven by domestic demand, which has been supported by stronger employment and wages.
The latest forecast is a downgrade from the IMF's last regional outlook for Europe in May, in which it predicted "growth to stay strong," reaching 2.6 percent in 2018 and 2.2 percent in 2019.