The International Monetary Fund cut its growth forecasts for the world economy Tuesday, warning of increasing risks from the slowdown in China, which is dragging other emerging markets down with it.

The global economy will expand just 3.1 percent this year and 3.6 percent next year, the IMF predicted, revising downward its previous forecasts by 0.2 percentage points in both cases.

Even though wealthy countries are showing signs of recovery, the world economy is on track for its worst year since the global recession of 2009, the IMF said in its latest report.

"The holy grail of robust and synchronized global expansion remains elusive," said the IMF's new chief economist, Maurice Obstfeld.

"Near-term growth remains moderate and uneven, with higher downside risks," he told a press conference in the Peruvian capital Lima, where the IMF and World Bank are holding their annual meetings this week.

The slowdown in China -- which the IMF predicted will grow 6.3 percent next year, its lowest rate in 25 years -- is taking a toll on other emerging economies that depended on the Asian giant's ravenous appetite for their raw materials.

Prices of oil, metals, minerals and other commodities have sunk as the world's second-largest economy has cooled, jolting the emerging markets whose boom drove the world economy during the 2008-2009 crisis.

- Sputtering Brazil -

Once-mighty Brazil is facing a three percent recession this year -- twice as bad as predicted in the IMF's last outlook, in July -- and Sub-Saharan Africa is set for growth of 3.8 percent, 1.2 points off the pace it registered last year.

Russia, another emerging giant, is in double trouble.

In addition to crashing prices for its oil exports, it faces Western sanctions over its role in the Ukraine crisis -- putting it on track for a contraction of 3.8 percent this year, the IMF forecast.

"While the growth slowdown in China is so far in line with forecasts, its cross-border repercussions appear greater than previously envisaged," the IMF said.

A looming decision by the recovering United States to raise interest rates is also hurting emerging economies as investors in search of higher returns stop parking cash there, the IMF said.

That reduced capital inflow is in turn taking a toll on emerging countries' currencies.

Obstfeld hedged on when the IMF expected the US rate rise to come, saying only that it would be either this year or next.

"They're making a data-driven decision, which the Fund supports," he said.

The World Bank for its part had already warned emerging economies in June to "fasten seat belts" for the potential turbulence from the imminent tightening of US monetary policy.

- 'Immense' refugee toll -

The wealthy countries that were at the epicenter of the 2008-2009 crisis are meanwhile undergoing a nascent recovery that is "expected to pick up slightly," led by stronger growth in Britain and the United States, said the IMF.

It predicted the US economy will grow 2.6 percent this year -- up 0.1 point from its July outlook -- and 2.8 percent next year.

But the advanced economies' growth remains "modest," the Fund said.

And it warned of lingering risks for the eurozone, predicting growth of 1.5 percent this year and 1.6 percent in 2016.

"Contagion risks from Greece-related events to other euro area economies, while lower than earlier in the year, remain a concern, as do risks from protracted weak demand and low inflation," said the Fund, which is due to decide soon whether to take part in a third bailout program for Greece.

The IMF also warned of "geopolitical risks" from conflicts in Ukraine and the Middle East, and sounded the alarm for the first time on the refugee crisis in Europe.

Obstfeld said the crisis carried "immense" social and political costs. But he added that in the long term, the influx of refugees would be "positive for growth in Europe," which will expand its labor force.

"Unfortunately it's tragic for countries such as Syria, which are losing large proportions of their populations," he said.

IMF warns of risk of 'stronger growth slowdown' in China
Beijing (AFP) Oct 6, 2015 - China's growth slowdown could result in a hard landing and authorities should take steps to further open up the economy, the International Monetary Fund said Tuesday as it reaffirmed forecasts that expansion would weaken to a quarter-century low.

The global impact of China's slowing economy is being felt worldwide, with commodity exporters from Angola to Australia feeling the pinch as the Asian giant switches from a high-growth investment model to one in which its increasingly wealthy consumers underpin steadier and more sustainable expansion.

But the IMF stressed that the task for Chinese leaders is not easy as they attempt a smooth transition following a run-up in credit and investment while allowing markets to play a bigger role in the economy.

The world's second largest economy, a crucial driver of global expansion, is suffering a sharp slowdown in growth despite government support measures including five interest rate cuts since November.

It grew last year at its slowest pace since 1990 -- the year after it was hit by global sanctions in reaction to the 1989 Tiananmen crackdown -- and there are fears it could be headed for a so-called "hard landing".

The IMF warned that such a scenario could come to pass unless leaders get a grip on the current crisis.

Under the sub-head "Hard landing in China", the report said: "There are risks of a stronger growth slowdown if the macroeconomic management of the end of the investment and credit boom of 2009-12 proves more challenging than expected."

In such a situation, the report said, authorities would be forced to ramp up policy by "shoring up investment through credit and public resources". It did not, however, offer any numerical indication of how low growth could go in such a scenario.

- 'Policy support' -

The IMF tipped growth this year of 6.8 percent and 6.3 percent in 2016, both the lowest since 3.8 percent in 1990. The forecasts were unchanged from its last World Economic Outlook in April and a subsequent update in July.

Beijing's official target is "about seven percent" for this year.

Tuesday's report said authorities will likely need to increase "policy support" to boost growth, hinting at tools such as further cuts in interest rates and in bank reserve ratios.

The key, however, lies in making good on previous reform promises, it said.

"The core of the reforms is to give market mechanisms a more decisive role in the economy, eliminate distortions, and strengthen institutions," it said.

Despite concerns, the IMF said China's slowdown appears manageable as long as what it termed "previous excesses" in sectors including real-estate and investment are addressed.

The report said China's economy stands to benefit from continued efforts to implement reforms, while lower prices for oil and other commodities will ease the pain for consumers.

It also said a recent huge sell-off in the stock markets is not expected to have a major impact on consumers since Chinese households do not invest heavily in equities.

"The current episode of financial market volatility is assumed to unwind without sizeable macroeconomic disruptions," the IMF said.

China shocked global markets in August with a devaluation of its currency, the yuan, and the IMF noted that the verdict on its effectiveness is still out.

"The recent change in China's exchange rate system provides the basis for a more market-determined exchange rate, but much depends on implementation," it said, indicating the country should go even further.

"A floating exchange rate will enhance monetary policy autonomy and help the economy adjust to external shocks, as China continues to become more integrated into both the global economy and global financial markets."