Among emerging market and developing economies, the International Monetary Fund report said growth prospects are becoming more uneven, amid rising oil prices, higher yields in the United States, escalating trade tensions, and market pressures on the currencies of some economies with weaker fundamentals.
After upgrading growth projections for the euro area in the April WEO, the International Monetary Fund revised them down by two-tenths in 2018 to 2.2 percent, due to "negative surprises to activity in early 2018", and another tenth in 2019 to 1.9 percent.
"Its growth is set to increase from 0.8 percent in 2017 to 2.1 percent in 2018 and 2.3 percent in 2019 (0.4 percentage point higher than in the April WEO for 2019) on the back of an improved outlook for oil prices".
The Fund also cut India's growth rate by a tenth of a point to 7.5 percent due to the negative effects of higher oil prices on domestic demand and faster than anticipated monetary policy tightening due to higher inflation.
"As the focus of global retaliation, the United States finds a relatively high share of its exports taxed in global markets in such a broader trade conflict, and it is therefore especially vulnerable", Obstfeld added. The IMF's global growth forecast of 3.9% remained unchanged for this year and next. Even the consumer price index inflation rate is at a five-month high.
The IMF also noted that China continued to grow in line with its earlier projections.
"The IMF had pointed out in April that good times in the global economy will not last and that "jarring" contradictions between growth momentum and a conflict over trade" will ultimately slowdown the global economy.
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"The risk that current trade tensions escalate further - with adverse effects on confidence, asset prices and investment - is the greatest near-term threat to global growth". President Donald Trump has even suggested that separate bilateral agreements could be sought with the two countries. Other threatened actions, which include another round of tariffs on an additional $200 billion in Chinese goods and a 25 percent US global tariff on auto imports now under study, are also included. China has matched U.S. tariffs dollar for dollar and threatened to take other steps to retaliate.
"Higher trade barriers would make tradable goods less affordable, disrupt global supply chains, and slow the spread of new technologies, thus lowering productivity".
On Saturday, Economic Affairs Secretary Subhash Chandra Garg had said, "Eight per cent growth is very much achievable".
Global cooperation and a "rule-based trade system has a vital role to play in preserving the global expansion".
The IMF's specific recommendations for emerging market and developing economies like India include reining in excess credit growth where needed, supporting healthy bank balance sheets and maintaining orderly market conditions in the face of increased volatility.
The IMF also revised growth predictions for the eurozone and Japan, as the organisation cited a "softer than expected" first quarter performance and tighter financial conditions brought on partly by political uncertainty. "To raise potential growth and enhance its inclusiveness, structural reforms remain essential to alleviate infrastructure bottlenecks, strengthen the business environment, upgrade human capital, and ensure access to opportunities for all segments of society", it added.