The International Monetary Fund (IMF) slashed global growth forecasts for this year and next to 3.3% from 4.4% and to 3.9% from 4.5% respectively, highlighting the threats posed from the European debt crisis, where the report noted that the near-term outlook has noticeably deteriorated.

The euro area is predicted to collapse into recession while recording 0.5% contraction in 2012, led by expected contractions of 2.2% and 1.7% for Italy and Spain respectively.

The IMF said global growth prospects will rely on the intense of the debt crisis and called European officials to increase the lending capacity of their rescue fund and continue support to financial institutions.

Regarding the U.S., the IMF affirmed the outlook of 1.8% expansion in 2012, China's outlook was lowered to 8.2% from 9.0% and Japan will expand 1.7% from 2.3%.

Also the IMF reduced emerging nation's growth outlook to 5.4% this year from 6.1% estimated in September.