The global economy has entered a "dangerous new phase", according to the International Monetary Fund (IMF).
In its World Economic Outlook bi-annual report, the IMF says the prognosis for developed economies is "weak and bumpy expansion".
The report warns that issues surrounding the U.S. and eurozone economies could drag them into recession.
It predicts that global GDP will expand "at an anaemic pace of 1.5% in 2011".
It believes global growth will shrink to 4% in 2012 from 5% in 2010 on factors such as "major financial turbulence in the euro-zone".
The IMF cites both the eurozone debt crisis and the fragile economic position of the U.S. as the major risks to world economic growth.
The IMF report urges the European Central Bank (ECB) to "intervene strongly to maintain orderly conditions in sovereign debt markets".
The IMF report also voices concerns about the US economic recovery and the chance it might "suffer further blows" including a weak housing market and worsening financial conditions.
It warns that either of the issues could drag both the U.S. and the euro area into recession.
It suggests that the U.S. needs to devise a plan to "put public debt on a sustainable path and implement policies to sustain the recovery".
The IMF has also voiced fears that the U.S. is facing what it calls a "very sluggish recovery of employment".
