The IMF said that although growth prospects are expecting to pick up in the second half of the year, risks are tilted to the downside because of growing geopolitical uncertainty and ongoing trade disputes.

“While the overall outlook remains benign, there are many downside risks. There is an uneasy truce on trade policy, as tensions could flare up again and play out in other areas (such as the auto industry) with large disruptions to global supply chains,” the IMF said in its report.

The IMF also said high levels of public and private-sector debt could exacerbate the downside risks.

The outlook could be positive for gold prices. The IMF warned that further economic weakness could weigh on market sentiment.

“The potential remains for sharp deterioration in market sentiment, which would imply portfolio reallocations away from risk assets, wider spreads over safe-haven securities, and generally tighter financial conditions,” the IMF said.

Adam Button, managing director at Forexlive.com, said that the latest IMF forecasts do not paint a pretty picture for investors.

“It was largely expected, but it’s a reminder that the entire reversal in market sentiment was based on a turn in central banks, not a turn in the real economy,” he said.

Looking at other domestic forecasts, the IMF said that it sees the Eurozone economy growing 1.3% this year, down from its previous estimate of 1.6%. Canada’s economy is expected to grow 1.5%, down from the prior forecast of 1.9%.

The one bright spot in the IMF report is in China; the fund increased its 2019 forecast to 6.3%, up from its previous projection of 6.2%.