ANALYST'S TAKE: The IMF report "should in no way surprise" as the fund's managing director Christine Lagarde warned that trade disputes were weighing on global growth last week, said Chris Weston of Pepperstone Group Limited.
Over the weekend, the PBOC cut bank reserve requirement ratios for a fourth time this year to ease credit conditions and support businesses, including exporters hit by the US trade war.
Obstfeld said the International Monetary Fund does not see a generalized pullback from emerging markets, nor contagion that will spill over to those emerging economies which have stronger economies and have thus far avoided major outflows, such as those in Asia and some oil exporting countries.
The growth in Latin America and the Caribbean as a region are expected to diminish by 0.4 percent, so 2018 will only see an increase of 1.2 percent and by 2.2 in 2019.
The IMF expects a 2.9 percent growth outlook on the U.S. economy, but thinks growth will shrink to 2.5 percent for 2019, attributing to the slowdown to the country's escalating trade war with China.
The Argentine government itself had predicted a 2019 contraction of 0.5 percent, also well below Tuesday's International Monetary Fund forecast.
The slowdown has been caused predominantly by the world's two largest economies - the United States and China - engaging an increasingly damaging trade war. German growth was revised down to 1.9 percent in both 2018 and 2019 due to a slowdown in exports and industrial production.
It said that risks to the short-term outlook had "shifted to the downside".
"An intensification of trade tensions and the associated further rise in policy uncertainty could dent business and financial market sentiment, trigger financial market volatility, and slow investment and trade", the report said.
At the same time, they note that the growth is becoming less balanced and in some leading economies, it may already have peaked. "Trade policy reflects politics, and politics remain unsettled in several countries, posing further risks", he added. One is NAFTA where a new trilateral agreement awaits legislative approval from the U.S., Canada, and Mexico.
U.S. President Donald Trump has accused China of deliberately manipulating its currency to gain a trade advantage, claims Beijing has consistently rejected.
But the USA tax cuts and rising spending that have boosted growth, helping compensate for the impact of the growing trade conflict, could spark a sudden "inflation surprise", and in turn lead to faster-than-expected rise in United States interest rates, according to the fund.
Mr Obstfeld said the world would become a "poorer and more risky place" unless world leaders worked together to raise living standards, improve education and reduce inequality.