The International Monetary Fund cut its forecast for globalgrowth and warned that the European debt crisis threatens to derailthe world economy.

“The epicenter of the danger is Europe but the rest of the worldis increasingly affected,” Olivier Blanchard, the fund's chiefeconomist, said today at a news conference in Washington. “There'san even greater danger, namely that the European crisisintensifies. In this case the world could be plunged into anotherrecession.”

The fund, in an update of its World Economic Outlook report,lowered its estimate for global growth this year to 3.3 percentfrom a September forecast of 4 percent. The expansion next yearwill be 3.9 percent, down from 4.5 percent. The euro area may entera “mild recession” in 2012 as it shrinks 0.5 percent. The U.S.outlook was unchanged at 1.8 percent growth.

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