The global finance agency dropped its projection for world economic growth by two-tenths of a percentage point for both 2018 and 2019 to 3.7 percent, the first time it had trimmed its economic outlook in more than two years.
The rupiah has indeed been under strong downward pressure, especially over the last three months, as a result of monetary tightening and stronger economic growth in the USA, which has caused higher capital outflows, and the upward trend in global oil prices, which has increased Indonesia's trade deficit and consequently the current account deficit to more than 2.5 percent of gross domestic product (GDP).
The body now expects the US economy to grow at a rate of 2.5 percent in 2019, a 0.2 percentage point decline from its April estimates.
Finance ministers and central bankers from numerous IMF's 189 member nations are meeting in Bali this week with talk of rising protectionism taking centre stage. Two weeks after that date, Hungary's Central Statistical Office (KSH) revised first-half GDP growth up 0.1 percentage point to 4.7 percent.
To offset the effects of Federal Reserve rate rises, U.S. trade tariffs and domestic economic pressure caused by tighter financial regulation aimed at reducing debt risks in China's financial system, the Chinese authorities have eased monetary policy and the implementation of proposed new financial regulations.
"It is clearly a necessary development for those economies that are showing much improved growth, inflation that is picking up. unemployment that is extremely low", she told a press briefing in Bali.
The IMF outlook already projects global growth will slow to 3.6 percent during 2022 - 2023.
Yet, even in its worst case scenario, the International Monetary Fund found that the disruption won't kill off growth and drag the global economy into recession.
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Mounting trade tensions and stresses in emerging markets are starting to take a toll on the world economy. "Notwithstanding the present demand momentum, we have downgraded our 2019 USA growth forecast owing to the recently enacted tariffs on a wide range of imports from China and China's retaliation." .
It also said Ghana's current account position will however remain negative though lower than before.
Obstfeld, who retires from the International Monetary Fund later this year, said there were bright spots, with some Latin American and African nations getting growth forecast upgrades.
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 Federal Reserve, the US central bank, has raised short-term USA rates three times this year as the American economy gains strength more than nine years after the end of the Great Recession.
Meanwhile, Dr Obstfeld is concerned that several economies have adopted policies that are "unsustainable over the longer term" to boost growth.
The IMF warned the uncertainty caused by the trade disputes "could lead firms to postpone or forgo capital spending and hence slow down growth in investment and demand".