IMF Warns of Risks to Global Growth, Advance Economies to Fall Sharply

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He said the economic slowdown in China would affect the global economy, including Indonesia, because the Chinese market accounted for 15 to 20 percent of Indonesia's total exports.

Downgrades for Germany and Italy were to blame for the IMF's decision to reduce its world growth forecast for this year to 3.5 per cent, below its October projection of 3.7 per cent.

Gopinath's comments came after the International Monetary Fund released an update to its global economic forecast, showing that a range of uncertainties, including Brexit, but also US-China trade confrontations, were threatening to drag down global growth even further.

In addition to global trade tensions, the report mentions a more substantial slowdown in China and a no-deal Brexit as possible triggers for a future deterioration in financial markets. "This estimated growth rate for 2018 and the projection for 2019 are 0.1 percentage point lower than in the October 2018 WEO, mostly due to downward revisions for the euro area", it said.

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Advanced economies have been on a declining path in terms of growth and this is taking place more rapidly than previously thought, according to the report.

Christine Lagarde, chair of the International Monetary Fund said, "the bottom line is that after two years of strong expansion, the world economy is growing more slowly than expected and risks are rising".

"The answer is 'no", but the risk of a sharper decline in global growth has certainly increased. The IMF has projected the economy will expand at 7.7% in 2020-21.

Speaking to India Today TV, Lagarde further said that it is a good sign that the projected growth is high but the government needs to address the crisis in the agriculture sector as a large number of people depend on this sector.

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"All of this economic and trade policy complements the very important relationship we share, because we all know that Australians don't just visit the United Kingdom - they study, work and build lives here, just as the same applies in reverse", he said. The Washington-based fund also predicted the economic growth of Africa will hit 3.6 per cent in 2020.

Lagarde urged policymakers to address economic vulnerabilities, especially by reducing high government debt.

The fund left its prediction for USA growth this year unchanged at 2.5 percent - though a continuation of the partial 31-day shutdown of the federal government poses a risk.

"Sometimes we spook ourselves, so it remains to be seen how slow is slow, how bad is bad, let's see how the first quarter looks", said Cha.

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"Across all economies, measures to boost potential output growth, enhance inclusiveness, and strengthen fiscal and financial buffers in an environment of high debt burdens and tighter financial conditions are imperatives", it said. Official figures yesterday showed that China's economy expanded at 6.6 percent previous year - the slowest pace since 1990. In addition, the unemployment rate fell back to 4.0%.