It cited USA tariffs on solar panels, washing machines, steel and aluminum, in addition to retaliation by trade partners, as potentially depressing factors.
She recommended more flexibility on capital flow management, adding that some emerging markets, including South East Asian countries, had been far too reluctant to ramp up capital controls to protect their own economies.
Addressing the media on the World Economic Outlook, in Bali, Indonesia, Mr. Obstfeld said developments on the global market have warranted a revision of their earlier decision.
"In the United States, momentum is still strong as fiscal stimulus continues to increase, but the forecast for 2019 has been revised down due to recently announced trade measures, including the tariffs imposed on $200 billion of US imports from China", IMF report said.
"The government has chose to approach the International Monetary Fund for stabilisation and an economic recovery programme", said the Finance Ministry in a statement after the stock market suffered an over 1,300-point plunge, losing nearly 270 billion Pakistani rupees ($2 billion) of its capitalisation - the highest single-day loss in a decade.
IMF's forecasts for Hong Kong's economic outlook are mixed: it raises its forecast for 2018 by 0.2 percentage points to 3.8%, while cutting its forecast for 2019 by 0.3 percentage points to 2.9%.
Mnuchin was quoted by the Financial Times on Wednesday as saying that the Treasury monitored currency issues "very carefully" and that the Chinese yuan, also known as renminbi, had fallen "significantly" during the year. Rupee rates to the dollar were Rs98.81, Rs101.78, Rs104.84 and Rs104.85 on 30th of June of 2014, 2015, 2016 and 2017 respectively.
More broadly, given continued monetary policy normalisation in advanced economies and escalating trade tensions, policy makers in emerging-market economies should be prepared to face portfolio flow reversals, said the IMF.More news: Google to shutter Google+ following undisclosed privacy breach
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The IMF said higher trade barriers could disrupt global supply chains, slow the spread of technology and ultimately lower global productivity and welfare.
"It was a combination of factors that basically affected emerging and frontier markets". The group recently downgraded global growth forecasts.
But higher U.S. interest rates have also helped send emerging market currencies into a tailspin, as countries that borrowed heavily in dollars race to pay back debt.
So far, the impact of the trade war between China and the USA has been contained to the two countries, but if it escalates, it could affect global financial stability, the International Monetary Fund said.
"Where we are now is we've gotten some bad news".
"US growth will decline once parts of its fiscal stimulus go into reverse", Mr Obstfeld said in a statement.
The head of the World Trade Organization warned that a "full-blown commercial war" could shrink global trade by almost 18 percent and also knock worldwide GDP, hurting the United States, China, and others.
The model also includes the effects of a reduction in business confidence that reduces investment and leads to a tightening of financial conditions.