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Global economic growth prospects remain strong, despite escalating trade tensions, geopolitical risks and U.S. inflation concerns, says Fitch Ratings in its latest global economic outlook.

The rating agency’s forecast for global growth remains unchanged at 3.3% for 2018 and 3.2% for 2019.

Accelerating private investment, tightening labour markets, accommodative monetary policy and expansionary fiscal policy in the U.S. are factors supporting above-trend growth in the world’s advanced economies, Fitch says.

As for emerging markets, China’s growth rate is holding up better than expected this year, Russia and Brazil are recovering, and higher commodity prices are supporting incomes in commodity-producing countries, the rating agency says.

However, Fitch sees a number of risks on the horizon, and has downgraded its forecasts for 10 economies, including the eurozone and Japan.

“Global trade tensions have risen significantly this year, but at this stage the scale of tariffs imposed remains too small to materially affect the global growth outlook. A major escalation that entailed blanket across-the-board geographical tariffs on all trade flows between several major countries would be much more damaging,” says Brian Coulton, chief economist at Fitch, in a statement.

Populist political forces also represents a growing downside risk, particularly in Europe, Fitch says, and  a faster-than-expected rise in U.S. inflation remains a key risk to the global outlook.

“An inflation shock in the U.S. could bring forward adjustments in U.S. and global bond yields and sharply increase volatility, harming risk appetite. In particular, it could lead to a rapid decompression of the term premium, which remains negative for U.S. 10-year bond yields. In combination with a likely aggressive Fed response, this would be disruptive for global growth,” adds Coulton.

For now however, Fitch is still forecasting a total of four rate hikes in 2018 from the U.S. Federal Reserve, followed by three more next year.