The International Monetary Fund is set to slash its official global growth forecasts this week as it seeks to cajole its members, including Britain, to sanction an increase in its rescue resources.
The lowered economic forecasts in the IMF's biannual World Economic Outlook will reflect the deterioration in the international economy since the last report was published in September.
Then the IMF expected 2012 global growth to come in at 4 per cent. Analysts are expecting the IMF to downgrade that projection to 3.5 per cent, taking into account weakening growth prospects for the Asian powerhouse of China, and the fact that the eurozone is now slipping into recession.
While that would represent a moderate improvement on the 3.3 per cent growth the IMF projected for 2012 in a January update, the fund's official forecast, because it contains a more complete economic analysis, tends to carry more weight with investors.
"The full forecast gives you a better sense of the entire macro picture. They are a better gauge of where things are," said Gustavo Bagattini of RBC Capital Markets. "We'll probably see a minor uptick to 3.5, 3.75 tops."
The IMF, which is holding its spring meetings this week, is also trying to convince member states to bolster its lending resources, to provide a credible backstop for highly indebted eurozone nations.
The managing director Christine Lagarde, right, set a target earlier this year to increase lending capacity from around $400bn to $1 trillion, implying she was seeking additional pledges amounting to $600bn. But in a speech in Washington this week Ms Lagarde said she was lowering her sights and G20 sources confirm the new target will be in the $400bn to $500bn range.
Emerging market nations such as Brazil, Mexico and China are keen to increase their contributions to the multilateral fund in order to boost their voting power in the IMF. But the UK, Canada and the United States have been resistant, arguing that the eurozone must do more to help itself in return for a larger IMF safety net.
If new resources are agreed they will probably take the form of bilateral loans to the IMF from willing nations, rather than an across-the-board increase in committed resources.
But, some analysts warn that even if an increase in resources is granted it will have a limited impact on the eurozone sovereign debt crisis. Neil Mellor, a currency strategist at BNY Mellon, said: "You can have as big a firewall as you like, but if there's no growth for the likes of Italy and Spain to meet their deficit objectives, then it doesn't matter because those yields are going to remain at elevated levels and keep them on a road to ruin."
In its September forecast the IMF forecast that the eurozone would expand by 1.1 per cent over 2012. The latest forecast from the European Commission is that the single currency economies will contract by 0.3 per cent this year. In September, the IMF expected China to grow by 9 per cent in 2012. In March, the Chinese premier, Wen Jiabao, said annual growth would be just 7.5 per cent.