Pakistan formally asks the International Monetary Fund for a bailout package

Finance Minister Asad Umar speaks in a video message. — DawnNewsTV

China's economy is also showing signs of moderating and that could be exacerbated by its trade disputes with the United States, which has imposed tariffs on $250 billion worth of imports from Beijing and is threatening duties on $267 billion more.

She acknowledged that the World Trade Organization, based in Geneva, has made scant headway in recent years toward a global agreement on trade rules that can address issues like complaints over Chinese policies U.S. President Donald Trump says unfairly extract advanced technologies and put foreign companies at a disadvantage in a quest to dominate certain industries.

World Bank Group president Jim Yong Kim told a separate briefing that he was deeply concerned that the intensifying trade tensions have caused a slowdown in the world economy and that they will bring greater impact on developing economies.

Lagarde said a trade war or currency war between the United States and China would affect both participants and a lot of innocent bystanders. "Overall, market participants appear complacent about the risk of a sharp tightening in financial conditions".

In the past few weeks, US Department of the Treasury officials have expressed concerns about China's weakened yuan as the department prepares its semi-annual report on currency manipulation. "So, India is not an emerging market economy where leveraging is progressing fast", Gasper said. Over the weekend, the PBOC cut bank reserve requirement ratios for a fourth time this year to ease credit conditions and support businesses, including exporters hit by the US trade war.

That would include boosting foreign currency reserves that could be used in a crisis, as well as working with local bond markets to build a local investor base, rather than relying on financing from overseas.

"So what we are doing right now is trying to understand exactly where countries sit in the global value chain", Dr Kim said.

The yuan has faced strong selling pressure this year, losing over 8 percent between March and August at the height of market worries, although it has since pared losses as authorities stepped up support measures. "I think Nigeria's economy will respond much better going forward", he said.

Using a hypothetical "stress test" scenario developed by the US Federal Reserve for banking regulation, the International Monetary Fund found a severe recession would cut the value of America's publicly held assets by an amount equal to 26 percent of GDP by 2020.

The outflows under its estimated tail-risk scenario are much higher than during the European sovereign debt crisis in the fourth quarter of 2011, for instance, when U.S. interest rates were low and the dollar was weaker, but risk aversion was high.

Khan also vowed to steer the country out of a looming balance-of-payments crisis.

Obstfeld said that Pakistan faced financing gaps as it has been hit by a large fiscal and current account deficit, a low level of reserves and a currency, which he described as "too rigid" and over-valued.

The leaders met Thursday in Bali, Indonesia, on the sidelines of the annual meeting of the International Monetary Fund and World Bank.