The International Monetary Fund has slashed its global growth forecast to 3.7% this year from 4.1% two months ago on mounting concern over the fallout from the financial crisis, which by its assessment is the worst to have enveloped the US since the Great Depression of the 1930s.

In a document entitled IMF Background Paper on the Update of the Global and Regional Outlook, the fund warned that there was even a 25% chance that the global growth rate would drop to 3% or less this year and into 2009, a decline it described as equivalent to a global recession.