The International Monetary Fund slashed the growth forecast for this year on Thursday, citing sluggish economic activity in the U.S. during the first quarter, and continued slowdown in the emerging market economies.
In the July update to its World Economic Outlook, the Washington-based lender forecast 3.3 percent global growth for this year, which is smaller than the 3.5 percent predicted in April.
The growth forecast for the U.S. economy was sharply cut to 2.5 percent from 3.1 percent. The outlook for euro area was maintained at 1.5 percent.
The projection for next year, however, was maintained at 3.8 percent.
Underlying drivers for a gradual acceleration in economic activity in advanced economies remain intact, the IMF said. These include easy financial conditions, more neutral fiscal policy in the euro area, lower fuel prices, and improving confidence and labor market conditions.
The lender also expects a rebound in activity in a number of distressed emerging market economies to result in a pickup in growth next year.
"The distribution of risks to global economic activity is still tilted to the downside," the IMF said.
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