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The International Monetary Fund (IMF) has warned again of a weakening global economic recovery despite government efforts to stimulate growth.
The IMF said in its latest report that the global economy is likely to grow at a slower rate than previously forecast over the next two years.
It said it now expected the eurozone to remain in recession in 2013, having previously predicted growth, reports the BBC. The UK''s growth forecasts have also been revised down. The IMF said continued problems in the eurozone were weighing on the global economy.
The eurozone''s economy is now forecast to shrink by 0.1 per cent this year. Just three months ago the IMF had forecast 0.2 per cent growth. Earlier there were signs that some confidence had returned to European markets, with Portugal returning to the bond market to borrow money from investors for the first time since seeking a eurozone bailout in 2011.
Its offering of 2bn euros of five-year bonds was four times oversubscribed by investors. But overall, the IMF now forecasts that the world economy to grow by 3.5 per cent this year and 4.1 per cent in 2014, 0.1 percentage points lower than stated in October''s forecasts.
Most of that growth is predicted to come from developing economies, rather than the developed countries still emerging from recession.
The prospects for the UK''s economy have also worsened in the last three months, the IMF forecasts suggest. Previously it forecast growth of 1.1 per cent this year and 2.2 per cent next year.
That has now been revised down to 1 per cent and 1.9 per cent growth respectively. The IMF said the challenges facing developed economies remained the same.
First, they need steady and sustained fiscal consolidation. Second, financial sector reform must continue to decrease risks in the financial system. Addressing these challenges will support recovery and reduce downside risks, the report said.