Media playback is unsupported on your device Media caption IMF chief economist Olivier Blanchard says George Osborne should rethink his economic plan

The International Monetary Fund's twice-yearly look at the world economy has lowered its forecasts for most developed economies, including the UK.

The IMF said world growth would now be 3.3% for the year, down from 3.5% forecast six months ago.

For the UK, it is forecasting growth of just 0.7%, after saying in January that the country's economy could expect 1% growth.

The figure is slightly above the 0.6% growth forecast in last month's Budget.

That figure came from the independent Office for Budget Responsibility.

The IMF's World Economic Outlook report also cut its forecast for the eurozone this year to -0.3%, with Germany, the strongest economy, expected to grow by 0.6%, but France on course to shrink by 0.1%.

Slowing down

The IMF said the UK was "progressing slowly".

It suggested the Chancellor, George Osborne, should consider reining back his austerity plan.

The chancellor is not fixing our problems nearly as fast as he hoped

The IMF's report said: "In the United Kingdom, the recovery is progressing slowly, notably in the context of weak external demand and ongoing fiscal consolidation."

It said economic weakness and a lack of willingness to lend were holding back the private sector.

The IMF rarely gives direct advice, preferring to give discreet prompts.

It said about the UK: "Greater near-term flexibility in the path of fiscal adjustment should be considered in the light of lacklustre private demand."

Stephen Gifford, director of economics from the business lobby group the CBI, said: "With recent data from our business surveys suggesting that growth at the beginning of this year was broadly flat, it's not surprising that the IMF has lowered its forecast.

Media playback is unsupported on your device Media caption Olivier Blanchard, IMF chief economist: "We have moved from a (global) two speed recovery, to a three speed recovery"

"Consumers are being squeezed by high inflation and low wages and business confidence remains unsettled, so the pace of growth is expected to be muted through 2013."

Japan was the only developed economy to come out with a good prognosis from the IMF.

It said that the country, which has been mired in recession for much of the last 20 years, would see growth both this year and next, of 1.4% and 1.6% respectively.

It also said consumer prices would notch up 0.1% this year and hit a rare height of 3% in 2014, thanks to the Bank of Japan's new bout of monetary easing announced earlier this month.

More generally, the IMF said "the road to recovery in the advanced economies will remain bumpy".

Its report forecast US growth of 1.9% this year, an Chinese growth of 8% for the year as a whole, slightly higher than the 7.7% growth rate it reported this week.