"China has stepped up its fiscal and monetary stimulus to counteract the negative effects of trade tariffs, and the outlook for US trade tensions has improved as the prospects for a trade agreement gather," said Gita Gopinath, Business The IMF Counselor wrote in the report.
However, the Fund has downgraded China's economic growth for 2020 from 6.2 percent to 6.1 percent.
"While the outlook is favorable overall, there are many downside risks to an uncomfortable ceasefire in trade policy as tensions flare up again and in other areas (such as the auto industry) could cause major disruptions to global supply chains might surprise you down, "said Gopinath.
China and the US have been in a trade war since last year. The two largest economies in the world have further increased their tariffs while negotiating a trade agreement. Regardless, the US has renegotiated a trade agreement with its North American neighbors Canada and Mexico and its Asian ally South Korea. Washington is also trying to re-evaluate its trade relations with the European Union and Japan.
The IMF has lowered its global growth forecast three times since last October, partly due to tensions between the US and its trading partners.