The International Monetary Fund said Wednesday that the moderate global growth in the first half of the year is reflective of two elements: a slowdown in emerging economies and weak recovery in advanced ones.
"In an environment of rising financial market volatility, declining commodity prices, weaker capital inflows and depreciating emerging market currencies, downside risks to the outlook have risen, particularly for emerging markets and developing economies," the IMF said in a report.
The analysis comes at a time when global markets have been in flux, with U.S. crude prices closing up nearly 2 percent on Wednesday after falling as much as 4 percent. This move came a day after crude futures settled down nearly 8 percent after a massive three-day rally.
Equities across the globe have also been taken for a ride, with U.S. stocks closing more than 1 percent higher across the board a day after plunging more than 2 percent.
The recent volatility has led the IMF to reiterate its position that advanced economies should maintain "supportive" monetary policies.
"In most advanced economies substantial output gaps and below-target inflation suggest that the monetary stance must stay accommodative. Fiscal policy should remain growth friendly and be anchored in credible medium-term plans," the IMF said.
In July, the organization said the Fed should hold off on raising rates until it sees higher price and wage inflation, adding that it doesn't see the central bank reaching its medium-term inflation objective until mid-2017.
"In the United States, growth in the first half of the year was 1.8 percent, compared to 3.8 percent in the 2nd half of 2014," it said in its latest report. "Recent revisions in the U.S. national accounts suggest that productivity growth during 2012-14 was lower than previously thought."
Nevertheless, the IMF added that it believes the second half will show pickup in the U.S. economy as well as other advanced economies, including Europe and Japan.
Emerging markets risks tilted to the downside
The IMF projects economic growth for emerging market economies to slow further, as financial conditions continue to tighten amid lower oil prices and China's economic slowdown.
"Fueled by a needed correction in residential real estate construction, investment slowed compared to last year, but consumption growth remained steady. As import contracted, net exports contributed positively to growth despite weaker-than-expected exports," it said.
Shanghai Composite in last 3 months
"The distribution of risks remains to the downside, and a simultaneous materialization of some of these risks would imply a much weaker outlook."