IMF: Global economy 'in danger zone' over euro crisis

The International Monetary Fund (IMF) has said the world's economy is "deeply into the danger zone" because of risks from the eurozone.

The IMF predicts the global economy will grow by 3.25% in 2012, down from an earlier forecast of 4%. The growth forecast for the UK economy has been cut to 0.6% from 1.6%. But the eurozone is set for a "mild recession" in 2012, with GDP expected to shrink by 0.5%, compared with a previous forecast of 1.1% growth. Shadow chancellor Ed Balls called for the government to rethink its austerity plan in the light of the IMF estimates. In response, the government said the IMF predictions matched those made by the independent Office of Budgetary Responsibility, which informs government economic policy. According to BBC growth estimates have been reduced for the main eurozone countries, including Germany, which is widely seen as the powerhouse of the region. Germany is forecast to grow 0.3% in 2012, down from the 1.3% originally predicted in September. France is expected to show 0.2% growth in 2012, down from 1.4%. However, the IMF stands by its 1.8% growth prediction for the US, based on recent strong domestic data on jobs and manufacturing. (BBC)