The United Nations financial agency said uncertainty has surged to unprecedented levels as a result of US President Donald Trump's upheaval of global trade linkages, in its World Economic Outlook for April.
Australia's economic growth projection for 2025 was downgraded to 1.6 per cent from 2.1 per cent in January.
But the 0.5 percentage point trim is not as bad as the hit to the projection for global growth, which was cut from 3.2 per cent to 2.4 per cent.
"Major policy shifts are resetting the global trade system and giving rise to uncertainty that is once again testing the resilience of the global economy," the IMF said in the document, released on Tuesday, US time.
Despite an equity markets suffering a correction since Mr Trump's tariff announcement on April 2, US stocks potentially had further to fall, given price-to-earnings ratios remain at historical highs, the IMF said.
Tariffs will dominate meetings between global financial leaders gathering at the IMF and World Bank meetings in Washington this week.
Finance ministers from around the globe will be eagerly seeking meetings with Mr Trump's lead tariffs negotiator, Treasury Secretary Scott Bessent, to strike a tariff exemption deal.
But a notable absentee will be Australia's Treasurer Jim Chalmers, who is tied up campaigning for the federal election.
Dr Chalmers said Australians would be worse off and more vulnerable to global economic uncertainty if Opposition Leader Peter Dutton won the election on May 3.
"At a time of extreme global uncertainty our responsible approach to economic management has never been more important," Dr Chalmers said.
"We're not immune from the turmoil in the global economy but the progress we've made together puts us in good stead."
Australian GDP growth is expected to pick up to 2.1 per cent in 2026, from 2.2 per cent projected in January.
Inflation is projected to come in 0.8 percentage points lower this year than previously forecast, at 2.5 per cent, before accelerating strongly to 3.5 per cent in 2026.
In its Global Financial Stability Report, also released on Tuesday, the IMF warned stretched asset valuations and highly leveraged financial markets could amplify shocks and exacerbate economic downturns.
Financial authorities should be ready to intervene to address severe liquidity or market function stress, the IMF cautioned.
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