The IMF's twice yearly World Economic Outlook report also said the world economy has "weakened significantly" and in a rebuke to politicians, said that "policy indecision... has added to financial strains".
It also said that the UK economy will grow at a slower pace than it had previously predicted.
Its UK growth forecast for 2011 has been revised downwards 1.5% to 1.1%.
For 2012, it has reduced its estimate of economic growth from 2.3% to 1.6%.
The government's official forecast for 2011 growth remains at 1.7% although the Chancellor has acknowledged this will be reduced when it is next reviewed.
Growth in the United States is forecast to slow to 1.5% in 2011 and 1.8% in 2012.
Christine Lagarde, the recently appointed IMF chief, has made repeated warnings that excessive austerity measures could cause another recession and urged European and US leaders to act to prevent a further deterioration in growth. Read More