One of the International Monetary Fund (IMF)'s most detailed studies of the state of banking since the financial crisis reveals trade tensions are building and claims a "growing anxiety" around a breakdown in negotiations between Britain and the European Union could lead to financial uncertainty.
For China, the next fastest growing major economy, the International Monetary Fund said it was lowering the growth projections for next year made in April by 0.2 per cent to 6.2 per cent "given the latest round of U.S. tariffs on Chinese imports".
The IMF expects growth in Russian Federation at 1.7 percent this year and 1.8 percent next year, it said in an update to its World Economic Outlook on Tuesday.
Its forecast for China's 2018 GDP growth remains unchanged at 6.6%, while revised downward by 0.2 percentage points for 2019 to 6.2%.
Finance Minister Asad Umar left for Indonesia on Monday night to participate in the annual meetings of the International Monetary Fund and World Bank at Bali, scheduled to run until October 12, and formally request a bailout programme, reports Dawn news.
The IMF has also projected the economy will grow at an average of 4,7 percent between next year and 2023.
At the top of the list are worries about emerging economies, especially Argentina and Turkey, two countries with heavy external debt that have had to raise interest rates sharply in recent months.
Under the 2015 Act, China only meets one of the three criteria for currency manipulation, namely that a country runs a significant bilateral trade surplus with the USA of at least US$20 billion.
As interest rates rise in advanced economies, prompting investors to take their money in search of higher returns, the IMF recommended emerging economies take steps to insulate themselves from an exodus of funds. These policies have contributed to a slowdown in economic growth, which is happening just as trade tensions with the US are starting to bite.
"We need to join hands to fix the current trade system, not destroy it", she added.
But additional tariffs and countermeasures "could lead to a broader tightening of financial conditions, with negative implications for the global economy and financial stability", the fund warned. "It's so tight. I think the Fed has gone insane", the United States president said.
The Washington-based institution had predicted a 2019 growth rate of 1.5 percent for Russian Federation in its last update in July.
China, however, could still be labelled a currency manipulator if the US Treasury decides to rely more heavily on the older 1988 Act, which allows for a more subjective assessment of whether a currency is being manipulated to gain unfair competitive advantage in trade.
The exercise assumes that US President Donald Trump imposes tariffs on the remaining $267 billion worth of Chinese goods imports not already under punitive tariffs and China retaliates in kind.