China was set to grow by 6.2 in 2019, down from the 6.4 percent projected last July.
Obstfeld applauded the government's pledges to push structural reforms to address its economic and financial issues, saying the Fund still views Pakistan with "immense potential" in growth. In July, US Secretary of State Mike Pompeo said there was "no rationale" for an International Monetary Fund bailout of Pakistan that pays off Chinese loans to Pakistan. However, some sources pointed out that Pakistan had to pay back around $6 billion to the International Monetary Fund which the country had obtained during the last PML-N government, so the size of the programme might go up to $10 to $12 billion.
The euro zone's 2018 growth forecast was cut to 2% from 2.2% previously, with Germany particularly hard hit by a drop in manufacturing orders and trade volumes.
The IMF also cut its outlook for China as a result of the tariffs, shaving its projection for growth next year to 6.2 per cent, down 0.2 point from three months ago.
But it predicts that US growth will slow to 2.5 percent next year as the effect of recent tax cuts wears off and as President Donald Trump's trade war with China takes a toll.
"But there is no denying that the susceptibility to large global shocks has risen", Obstfeld said.
If projections are true, then India would regain the tag of fastest growing major economies of the world, crossing China with more than 0.7 percentage point in 2018 and an impressive 1.2 percentage point growth lead in 2019. "Any sharp reversal for emerging markets would pose a significant threat to advanced economies", said Obstfeld.
"The prime minister, after consulting everyone, decided today that we should open talks with the IMF", Umar said.
Some energy-rich emerging market countries have fared better due to higher oil prices, with Saudi Arabia and Russian Federation receiving upgrades to growth forecasts.
The IMF said the balance of risks was now tilted to the downside, with a higher likelihood that financial conditions will tighten further as interest rates normalise, hurting emerging markets further at a time when US-led demand growth will start to slow as some tax cuts expire. "Our probability that we would attach to further bad news has gone up", Obstfeld said. Threats include a further inflaming of the trade war between the United States and countries including China, and a sharper-than-expected rise in interest rates, which would accelerate capital flight from emerging markets.
Global trade is projected to expand by 4.2 per cent this year - 0.6 per cent less than expected in July - dropping to four per cent next year.
China's yuan currency has faced strong selling pressure this year, losing over 8 percent between March and August at the height of market worries, though it has since pared losses as authorities stepped up support.
That includes President Donald Trump's imposition of tariffs on $250 billion in Chinese goods, as well as on aluminum, steel and other products worldwide.