IMF slashes 2012 global growth forecast from 4 to 3.3 percent

Washington, Jan 20(ANI): The International Monetary Fund has slashed its global growth forecast from 4 to 3.3 percent this year and called on the European Central Bank to boost liquidity to avert a deeper eurozone crisis.

"The global recovery is threatened by the growing tensions in the euro area," the Telegraph quoted a leaked portion of the IMF report, World Economic Outlook , as saying.

The report has predicted that the eurozone as a whole will shrink by 0.5 percent and Britain will record 0.6 percent growth.

Italy's economy will contract by 2.2 percent and Spain's by 1.7 percent, the report added.

The new figures suggest that the deteriorating financial scenario has caught the IMF by surprise.

The report said that the US growing at 1.8 percent and China recording a 8.2 percent growth would remain as two major powerhouses in the wake of the eurozone crisis.

"The most immediate political challenge is to re-establish confidence and put an end to the euro area crisis, supporting growth," the draft said.

The IMF encouraged the ECB to continue moving to a "more accommodative monetary policy" to prevent contraction of credit as European banks shrink their balance sheets to meet tougher capital ratios by June. (ANI)