LONDON (CNNMoney) – A tentative recovery in the global economy is running out of steam and growth could weaken further due to Europe's debt crisis and inaction over a looming fiscal squeeze in the United States, the International Monetary Fund said Monday.
In its latest World Economic Outlook, the IMF predicted global growth of 3.3% this year, down 0.2% from July. The IMF was also more pessimistic about 2013, when it expects growth of only 3.6%, down from its previous forecast of 3.9%.
"The recovery has suffered new setbacks, and uncertainty weighs heavily on the outlook," the IMF said. "A key reason is that policies in the major advanced economies have not rebuilt confidence in medium-term prospects."
The U.S. economy is projected to grow 2.2% this year and 2.1% in 2013, according to the report. In July, the IMF projected 2% growth this year and 2.3% in 2013.
The IMF said growth would be even weaker than forecast if eurozone leaders fail to take further measures to support ailing members of the 17-nation currency union, and if the United States drives headlong over the so-called fiscal cliff - a $7 trillion program of automatic tax increases and spending cuts that start taking effect at midnight on Dec. 31.
This morning on "Early Start," Christine Romans explains what this new IMF report could mean for the global economy.
READ MORE: IMF: Slow growth, big risks