The International Monetary Fund delivered a pessimistic update to its forecast for the world's economy on Tuesday.
In January — the last time it gave an update — the group expected the world's economy to grow at a reasonable pace, slightly ahead of 2012's pace.
Conditions have worsened further in the past three months, however, and the situation in Europe demands more "aggressive" action from policymakers, the IMF said.
"Europe should do everything it can to strengthen private demand," IMF's chief economist Olivier Blanchard said.
"What this means is aggressive monetary policy, and what this means is getting the financial system to be stronger — it’s still not in great shape."
Canada, U.S. forecasts
The IMF says the world's economy will expand by 3.3 per cent this year. That's less than the 3.5 per cent pace of growth that the IMF expected previously, but a bit higher than the 3.2 per cent growth seen in 2012.
The IMF expects the U.S. economy to expand 1.9 per cent this year. That's below its January estimate of 2.1 per cent and last year's U.S. growth of 2.2 per cent. Still, the IMF says the U.S. economy should expand 3 per cent in 2014.
As for Canada's economy, the IMF expects it will likely slow to about 1.5 per cent this year from 1.8 last year, before picking up to 2.4 per cent in 2014.
"The main challenge for Canada's policy-makers is to support growth in the short term while reducing the vulnerabilities that may arise from external shocks and domestic imbalances," the body advises.
"Although fiscal consolidation is needed to rebuild fiscal space against future shocks, there is room to allow automatic stabilizers to operate fully if growth were to weaken further."