The World Economic Situation and Prospects report says this would mark one of the lowest growth rates in recent decades.

The number of new claims filed for unemployment benefits unexpectedly fell, pointing to solid job growth and continued labour market tightness despite efforts by the Federal Reserve to cool demand for workers.

Bank shares initially tumbled on the reports, but reversed course in the middle of the session.

Global growth is expected to slow further this year, as central banks including the US Federal Reserve have raised interest rates to cool surging prices.

Kristalina Georgieva says the three big economies – the US, EU and China – are 'all slowing down simultaneously'.

The announcement heralds a cautious outlook with 'more negatives than positives' as Europe fears a looming recession and continues to grapple with double-digit inflation as well as the fallout from the war in Ukraine.

However, she believes the world's biggest economy is on the right track in lowering inflation.

Banks are increasingly nervous about extending credit to small companies, as rising costs of debt, labour and raw materials put the business case of lending to such companies under unprecedented strain.

Yet the Russian economy has so far survived Western sanctions better than many economists expected.

Britain's economy is now further below its pre-pandemic size - it is the only Group of Seven economy yet to recover fully from the Covid slump - and is smaller than it was three years ago on a calendar-quarter basis.

Sterling extended heavy losses and was down almost 2% against the dollar, touching its lowest when Britain was recovering from a political crisis triggered by former prime minister Liz Truss' tax-cutting plans.

The IMF says its latest World Economic Outlook forecasts show that a third of the world economy will likely contract by next year.