The World Bank says the global economy is on the edge of a new financial crisis, deeper and more damaging than the one that followed the collapse of Lehman Brothers in 2008.

Its latest six-monthly assessment of global economic prospects halves its forecast for growth among high-income countries, and pushes its forecast for countries using the euro into negative territory.

The World Bank sees a risk of a ‘much broader freezing up of capital markets’.

It has slashed its global growth forecast for 2012 from 3.6 per cent to 2.5 per cent. High-income nations are forecast to grow at 1.4 per cent rather than 2.7 per cent. The euro area's economy will shrink 0.3 per cent.

Contact the reporter: peter.martin@fairfaxmedia.com.au