The International Monetary Fund has sharply lowered its forecast for the world's economic growth due to the US credit crunch. In its latest World Economic Outlook, the IMF put the world growth at 3.7% in 2008, 1.25% lower than the growth rate in 2007.

The IMF said the US would go into a mild recession this year, predicting a sharp cut in its economic output from 2.2% in 2007 to 0.5% this year.

The fund also said there was a 25-percent chance that the growth in world economy will fall below three percent signaling global recession.