The International Monetary Fund says the global economy is likely to to grind to a virtual halt, with a growth rate this year of 0.5% - its lowest rate since the Second World War.
In October, the IMF predicted that world output would increase by 2.2% in 2009.
It now projects Britain, which recently went into recession, will see its economy shrink by 2.8% next year.
The agency says financial markets remain under stress and the global economy has taken a sharp turn for the worse.
It says global output and trade are plummeting, and it is expected the world economy will stop growing in 2009.
Meanwhile, the International Labour Organisation says the economic crisis could result in a loss of 51 million jobs worldwide this year.
The agency says the signs suggest the downturn will get worse before it improves.
It had been hoped that growth in developing nations would continue at a steady pace and help offset the recession in developed nations such as the United States and the United Kingdom.
But the seemingly endless crisis in the banking system has put paid to that notion.
Countries such as China are now struggling with a collapse in demand from their primary export markets.
Developed economies such as Japan, Spain, the US and UK are in recession, with new job losses being announced on a daily basis.