EU-wide, downside risks include a protracted period of elevated bond yields in Italy that would weigh on economic activity and worsen debt dynamics, the rising possibility of Britain leaving the EU without a deal, as well as "European Parliamentary election outcomes that delay or reverse progress on strengthening the euro area architecture", according to the report.
Governments might need to open their pocketbooks at the same time "across economies" if the slowdown becomes more serious, Gopinath said, adding that loose monetary policy might also be needed.
Overall the wider regional economy is projected to improve in 2020 to a healthy growth rate of 3.2 percent, the International Monetary Fund said. This is 20 basis points lower than January outlook and 10 basis points lower than October's forecast. She said that if the downside risks do not materialize and policy supports that have been put in place are effective, then global growth will rebound to 3.6% in 2020.
Regionally, IMF predicts that the baseline outlook for emerging Asia remains favourable, while subdued commodity prices and civil strife or conflict in some cases, contribute to subdued medium-term prospects for Latin America; the Middle East, North Africa, and Pakistan region; and parts of sub-Saharan Africa.
Growth among advanced economies is seen easing to 1.8% from 2.2% previous year, while expansion of emerging markets is seen softer at 4.4% from the 4.5% estimate under the latest WEO Update.
The IMF in its report did not state any specific reasons why it maintained its growth outlook for Korea for this year, but market analysts assumed the latest action by the IMF reflects the Korean government's super-sized budget for this year and proposal for another mega budget for next year to shore up the cooling economy.
"Increasingly, opaque or unsustainable lending practices weaken investor confidence, erode governance and accountability and create a drag on economic growth". It is the lowest annual growth outlook since the Great Recession of 2008.
In an ominous sign, the International Monetary Fund said Beijing might need to unleash fiscal stimulus "to avoid a sharp near-term growth slowdown that could derail the overarching reform agenda".
Domestic regulations were tightened to constrain shadow financial intermediation, resulted in slower domestic investment, especially in infrastructure. The IMF noted Beijing's effort to support its economy which has helped "counter the negative effect of trade tariffs".
Cuts 2020 China forecast to 6.1% from 6.3%.
US Treasury yields slid on concerns about the global economic outlook while the S&P 500 index and the Dow Jones Industrial Index were down more than half a per cent amid worries that a USA threat to slap tariffs on hundreds of European goods would be a further economic drag.
The IMF WEO 2019 also says, " a social dialogue across all stakeholders to address inequality and political discontent will benefit economies".
Gopinath called for greater multilateral cooperation to resolve trade conflicts, address climate change and risks from cyber security, and to improve the effectiveness of global taxation.
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