Fears of an escalating trade war between the US and China and the threat of a “no deal” over Brexit has the International Monetary Fund worried about the global economic outlook.

Such concerns are also unnerving businesses and Australian consumers.

In an update to its World Economic Outlook, the IMF has again downgraded its global growth forecasts while warning: “Risks to global growth tilt to the downside”.

The IMF nudged down its global growth forecast for 2019 to 3.5 per cent from 3.7 per cent, having already downgraded its predictions in October because of the negative effects of tariff increases in the US-China trade war.

World growth was 3.7 per cent in 2018.

“An escalation of trade tensions beyond those already incorporated in the forecast remains a key source of risk to the outlook,” the Washington-based institution said.

It said there are a range of other triggers that could have adverse growth implications, “especially given the high levels of public and private debt”.

“These potential triggers include a “no deal” withdrawal of the United Kingdom from the European Union (Brexit) and a greater-than-envisaged slowdown in China,” it said.

The IMF urged countries to resolve their trade disagreements co-operatively and quickly “rather than raising harmful barriers further and destabilising an already slowing global economy”.

Other threats to the global outlook include:

• A prolonged US government shutdown
• Financial risks in Italy further weighing on domestic demand
• Spillovers from Brexit affecting other EU members
• Geopolitical tensions in the Middle East and east Asia
• Longer-term risks include the effects of climate change and ongoing declines in trust of established institutions and political parties

Businesses around the world are also growing worried about the outlook.

Almost a third of firms surveyed by consultants PricewaterhouseCoopers believe global growth will decline in the next 12 months, six times the level recorded a year ago – a record jump in pessimism.

This finding in PwC’s 22nd annual survey released at the yearly World Economic Forum in Davos, Switzerland, compared with a 29 per cent jump to 57 per cent in optimism about growth prospects 12 months ago.

“With the rise of trade tension and protectionism it stands to reason that confidence is waning,” Global PwC chairman Bob Moritz said.

The IMF’s latest downgrade also reflected moderating growth in the euro area due to the negative impact from street protests and industrial action in France, Italy’s fiscal problems and Germany’s introduction of new fuel emission standards impacting on industrial production.

While the IMF did not specifically mention Australia in its report, it did note a softening in metals and agricultural commodities since August, key components of Australia’s exports.

This was in part due to subdued demand from China, Australia’s No.1 trading partner.

Little wonder confidence among Australians has seen a wobbly start to the year.

The weekly ANZ-Roy Morgan consumer confidence index fell 0.9 per cent, wiping out most of 1.4 per cent gain of the previous week, which followed a large 2.2 per cent drop before that.

ANZ head of Australian economics David Plank said despite this volatile start to the year for consumer confidence, the index still remains above its long-run average.

However, it is 5 per cent lower than its average for January 2018.

“The global news is not helping, with China slowing and political developments in the UK and US dispiriting,” Mr Plank said, releasing the confidence report on Tuesday.

Consumer confidence is a pointer to household spending, a major part of Australian economic growth.

Colin Brinsden is AAP’s former economics correspondent based in the Canberra Press Gallery