"China has ramped up its fiscal and monetary stimulus to counter the negative effect of trade tariffs. Furthermore, the outlook for US-China trade tensions has improved as the prospects of a trade agreement take shape," Gita Gopinath, IMF's economic counselor, wrote in the report.
However, the fund downgraded China's economic growth for 2020 to 6.1 percent from its previous projection of 6.2 percent.
"While the overall outlook remains benign, there are many downside risks. There is an uneasy truce on trade policy, as tensions could flare up again and play out in other areas (such as the auto industry) with large disruptions to global supply chains. Growth in China may surprise on the downside," said Gopinath.
China and the U.S. have been engaged in a trade war since last year. The world's two largest economies have put on hold further increases in tariffs while they negotiate a trade deal. Separately, the U.S. has renegotiated a trade deal with its North American neighbors Canada and Mexico, and Asian ally South Korea. Washington is also seeking to reassess its trading relations with the European Union and Japan.
The IMF has cut its forecast for global growth three times since last October due in part to tensions between the U.S. and its trading partners.