Warning that the broad expansion for the world economy that began about two years ago has plateaued, Maurice Obstfeld, the IMF's chief economist, said: "Countries must resist inward-looking thinking and remember that on a range of problems of common interest, multilateral cooperation is vital".
The IMF announced the upgrade in its World Economic Outlook (WEO) Update, July 2018 titled, "Less Even Expansion, and Rising Trade Tensions". China's growth was forecast at 6.6 percent in 2018 and 6.4 percent in 2019.
Although India is still expected to be the fastest growing major economy in 2018 and 2019, and a key driver of global growth, the International Monetary Fund predicts slight deceleration in the economy.
Meanwhile global growth is projected to reach 3.9% in 2018 and 2019, in line with the forecast of the April 2018 outlook.
Forecasts for the United States and China were both unchanged, with USA growth pegged at 2.9 percent in 2018 and 2.7 percent in 2019. "For India, the main factor is the rise in oil prices, and India is an oil importer".
"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. The rates for most emerging economies, including Argentina and Brazil, have been revised.
On Saturday, Economic Affairs Secretary Subhash Chandra Garg had said, "Eight per cent growth is very much achievable".
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The IMF warned that some large economies in Latin America, emerging Europe, and Asia will growth at rates below its April forecasts.
Just three months back, the International Monetary Fund (IMF) had been pretty upbeat about the state of the global economy. Alongside the threat of greater trade disputes, Obstfeld said: "Financial markets seem broadly complacent in the face of these contingencies".
The report noted that these financial conditions remained relatively benign but capital account pressures had been most intense for those with evident weaknesses - political uncertainty or macroeconomic imbalances. That, in turn, has an effect on the monetary policy, consumption and investments.
Global current account imbalances would widen owing to a relatively high demand growth in the United States, the report added.
The US economy is still seen growing by 2.9 percent this year and the estimate for China remains 6.6 percent, with little impact expected near term from the tariffs on tens of billions of dollars in exports the countries have imposed on each other so far.
"Our modeling suggests that if current trade policy threats are realized and business confidence falls as a result, global output could be about 0.5 percent below current projections by 2020", added Obstfeld.
The report noted that worldwide migration pressures were "politically destabilising" and could not be dealt with without cooperative action to "improve global security, support the Sustainable Development Goals, and resist climate change and its effects".