Western economies must take decisive action if they are to avoid slipping back into recession in 2012 and a decade of stagnation, the International Monetary Fund (IMF) has warned.

The international body said today (20 September) that the world economy is in a "dangerous new phase", as it pegged back growth projections for many developed economies and warned that fresh recession is a risk for next year. The eurozone debt crisis, which worsened today after Italy was downgraded by Standard & Poor's, together with high debt levels in the US, are causing concern. 

"Only if governments move decisively on fiscal policy, financial repairs, and external rebalancing, can we hope for stronger and more robust recovery,” said IMF chief economist Olivier Blanchard. For 2011, the body said that developed economies face "anaemic" growth in gross domestic product, of just 1.6%. 

It warned of a "decade of lost growth" in advanced economies. The strongly-worded report echoes renewed concern across markets and companies. Earlier this month, PepsiCo's CFO, Hugh Johnston, told analysts: "The outlook has been degrading over the last six months and it's now clear the developed markets have little growth."