The International Monetary Fund has joined a growing band of world experts who are taking a more pessimistic view of the global economy.
In its World Economic Outlook, the IMF told US and European decision makers to be proactive in fixing their respective financial woes as a matter of urgency or the slump will drag on much longer than expected.
The IMF Chief Economist Olivier Blanchard said: “In advanced economies, growth is now too low to make a substantial dent in unemployment and in major emerging markets, growth which had been strong earlier has also decreased.”
The IMF’s latest health check on the world economy revises its global growth forecast down to 3.3 percent.
For the US, it projects growth at just above two percent for this year and next.
But the eurozone is predicted to contract even more than thought in the summer.
Last week, Canada’s finance minister said the eurozone debt crisis was a ‘clear and present danger’ to the global economy.
As for Britain, the IMF warned the government to ease off on spending cuts planned for next year should growth turn out to be weaker than forecast. The UK opposition have long said the programme of cuts is too much too fast.
The forecast for Spain’s already gasping economy, the eurozone’s fourth largest, is that it will contract at double the rate previously thought next year.