Turmoil in emerging markets this summer has forced the International Monetary Fund into a humbling series of U-turns over its global economic assessment.

In a confidential note on world economic prospects seen by the Financial Times, the fund has dropped its view that emerging economies were the dynamic engine of the world economy, instead noting that “momentum is projected to come mainly from advanced economies, where output is expected to accelerate”.

The note, which was produced for world leaders attending the Group of 20 summit in St Petersburg this week, urges them to take action to mitigate risks from weakness in poorer countries. But its clout with presidents and prime ministers is likely to be diminished by the IMF’s failure to provide an accurate assessment of the world economy as recently as its spring meetings in April.

The IMF did warn in April, however, that the end of extraordinarily loose monetary policy in advanced economies might cause turmoil in financial markets and sharp depreciations in emerging economy exchange rates.

But at those meetings, the IMF concentrated on describing a “three-speed recovery” with strength in emerging economies, the US on the mend and European economies still in the mire of stagnation and reflected this view in its forecasts. In the note for the G20, it admits, “recent indicators point to stronger underlying activity in several advanced economies while key emerging economies have slowed”.

In April, the fund warned the US to slow its deficit reduction efforts, saying there “should be less and better fiscal consolidation now”. The G20 note concedes that contrary to its April predictions, “private demand remains relatively robust in the face of fiscal tightening”.

In April, Olivier Blanchard, IMF chief economist, singled out the UK as a country that should lighten up on austerity, but the fund now recommends that countries follow the British policy of “achieving structural fiscal targets and allowing automatic stabilisers to play freely”.

When approached, the IMF refused to comment on the changes in its global outlook.

In a similar vein to the Organisation for Economic Cooperation and Development’s public economic assessment, the IMF now expects global growth to remain subdued with a recovery in the US, Europe and Japan offset by significantly worse prospects in many emerging economies. Fund staff have revised down their near-term growth projections for emerging economies, placing them 2.5 percentage points below 2010 levels, “with Brazil, China and India mainly accounting for this growth slowdown”, the note said.

Seeing capital both fleeing emerging economies as a result of lower growth prospects and being attracted to advanced economies by higher interest rates, the fund noted that downside risks for emerging economies “have become more prominent”.

Although the Fund dislikes manipulating exchange rates, it will please many emerging economies by noting there were circumstances where intervention was necessary. “Policy makers should allow exchange rates to respond to changing fundamentals but may need to guard against risks of disorderly adjustment, including through intervention to smooth excessive volatility,” the note to the G20 advised.

It also recommended emerging markets with sound finances and policy credibility could loosen monetary policy in response to the weaker outlook, but where inflation still looms, it warned “the scope for easing the monetary stance may be very limited or it may need to be tightened”. Concerned about further instability, the fund also called for “stronger regulatory oversight and macroprudential policies” in emerging economies, “as a strong complement for prudent policies”.

The Financial Times