It said, the prediction is lower due to recent increase in oil prices and the tightening of global financial conditions.
They show that a burst of strong growth, fueled partly by USA tax cuts and rising demand for imports, was starting to wane. Instead, the Chinese maintain, they have boosted the country's economic growth and provided 70,000 jobs.
The US will also see its growth "decline" once its fiscal stimulus, delivered through wide-ranging tax cuts "goes into reverse" according to Mr Obstfeld.
The US simultaneously threatened to add tariffs to a further $267 billion (£205 billion) of products, which saw China retaliate with 10 percent tariffs on $60 billion (£46 billion) of US imports.
The report says that outflows could hit $US100 billion over a year, about 0.6 percent of emerging market economies' gross national income.
The International Monetary Fund on Monday said India will grow at 7.3% in the 2018-'19 financial year.
USA growth this year remained steady at 2.9 percent but is set to slow in 2019 as the effect of Trump's sweeping tax cuts wear off and the trade dispute with China begins to set in. Stocks rose in Taiwan, Thailand and Indonesia but fell in Singapore. It had previously predicted jobless rates of 5.5% and 5.2% respectively.
It also said inflation in India is on the rise, estimated at 3.6 per cent in fiscal year 2017/18 and projected at 4.7 per cent in fiscal year 2018/19, compared with 4.5 per cent in fiscal year 2016/17, amid accelerating demand and rising fuel prices. "Any sharp reversal for emerging markets would pose a significant threat to advanced economies", said Obstfeld.
The World Bank recently cut its growth projections for Nigeria by 0.2% citing reduction in oil production levels, and contraction in the agricultural sector, following the herder-farmer crisis.
"We are concerned about the downturn in economic growth", noted Jubilee USA Executive Director Eric LeCompte.
Trade tensions are expected to continue although Fund officials view U.S. -Mexico-Canada trade agreement as a positive sign.
How bad could the trade war get?
"We will be listening very, very attentively when and if they come to us", said Obstfeld.
While tax cuts and increased spending have seen an immediate upswing in United States growth, the International Monetary Fund warned that the country could face an unwelcome "inflation surprise", which would prompt the Federal Reserve, America's central bank, to hike rates at a faster-than-expected pace. This growth exceeds that achieved in any of the years between 2012 and 2016, and it occurs as many economies have reached or are nearing full employment and as earlier deflation fears have dissipated.
The repercussions for the United States and China would be particularly severe, with 2019 GDP losses of more than 0.9 percent in the United States and 1.6 percent in China in 2019. In September, Trump imposed tariffs on almost $200 billion of Chinese imports, with China responding with higher tariffs on about $60 billion of US imports.