The revised estimates includes a worsening outlook for developing economies this year and next compared to the July report, as well as downgrades for the United States and China in 2019. It noted that risks from "further disruptions in trade policies" have become more prominent.
The dominant USA economy has been shielded from the ill effects so far due to the stimulus provided through tax cuts and spending policies, but that will wear off by 2020.
Dr Obstfeld also expects Indonesia to turn in "fairly strong" growth, despite the weakening rupiah.
The report warned that growth "may have peaked in some major economies".
The IMF projects average annual inflation will pick up to 2.8 percent in 2018 and to 3.3 percent in 2019, climbing over the National Bank of Hungary's 3.0 percent mid-term target.
It explained that its downgrades to global growth also reflect predictions of a slower expansion in the eurozone, as well as turbulence in a number of emerging market economies such as Argentina, Turkey, and Venezuela.
For next year, trade is seen growing just four per cent, a half point less than the prior forecast.
It said the dispute between the USA and China would especially leave developing economies vulnerable to sudden stresses. "Inclusive fiscal policies, educational investments, and ensuring access to adequate health care can reduce inequality and are key priorities", he added. Not only have some downside risks that the last World Economic Outlook identified been realised, the likelihood of further negative shocks to our growth forecast has risen.
The Fund says the global economy's growth target has dropped by 2 percent from the initial 3.9 percent.
"Last April, the world economy's broad-based momentum led us to project a 3.9 per cent growth rate for both this year and next".
In a downcast assessment on the global economy, the International Monetary Fund pointed the finger at trade policy tensions as part of its reason for predicting slower global growth.
One of the most comprehensive studies of the state of banking and markets since the financial crisis warns that "dangerous undercurrents" are a rising threat to the world economy. But US growth will decline once parts of its fiscal stimulus go into reverse.
Keeping rates low would avoid increasing the cost of borrowing, which could help support China's slowing growth.
Tensions have soared in recent months with US President Donald Trump's administration rolling out billions of US dollars in tariffs against China in a bid to tackle its trade deficit and rein in what Washington views as unacceptable trade practices by the Asian giant.
Even though Indonesia is not included in the International Monetary Fund list of most vulnerable economies (Argentina, Brazil, South Africa and Turkey), as its economic fundamentals and its financial sector stability are now much stronger than during the 1998 Asian economic crisis and the 2008 global financial crisis, it is by no means a time for complacency.