In its latest Global Economic Prospects report, the World Bank downgraded its forecasts for 2012 and 2013 by almost half due to a deterioration in the world economy over the past six months.
The Washington-based institution now forecasts global growth at 2.5 per cent in 2012 and 3.1 per cent in 2013, down from its June 2011 forecast of 3.6 per cent for both years.
"The world has entered a very difficult phase characterised by significant downside risks and fragility," the bank said on Wednesday (AEDT).
The report warned capital markets could freeze up, leading to a crisis similar in size to that caused by the collapse of US investment bank Lehman Brothers in September 2008, which marked the start of the global financial crisis. Read More