The official International Monetary Fund (IMF) global economic forecast is out and the broad outlook is that economies are still on edge and sluggishly weak.

Growth prospects for both the developed and developing markets have been downgraded in the latest IMF World Economic Outlook, with the former tapering down its expansion to 1.5 per cent from the previous estimate of 2.0 per cent.

For the emerging economies, the advancement should be in a better pace yet slowed down just the same, the IMF report said, from the earlier projection of 6.0 per cent to 5.6 per cent for 2013.

Globally, the IMF said it has to pare down a bit its outlook for the international setting - from 3.5 per cent to 3.3 per cent by yearend.

The prime reason is the perennial woes that economists have been bemoaning, at least in the past two years - the financial downturns still unfolding in Europe, which has spawned spillover effects on key Asian economies, China including.

"Because the world now is so interconnected, what happens in one part of the world has an effect on the rest of the world and so all these things are combining to slow down growth," IMF chief economist Olivier Blanchard explained in Tokyo on Tuesday.

Apart from the risks that remain very much in circulation in Europe, the IMF warned of what it called as the developing fiscal cliff in the United States, where officials are locked in squabbles over plans to implement tax increases while cutting back on federal expenditures.

If the budget showdown between the White House and the U.S. Congress continues and mismanagement is allowed to set in, the American economy can look forward to a double-dip recession, Mr Blanchard said, which of course would have grave ripple effect to key markets around the world.

Economic deterioration, needless to say, could be accelerated by faulty policies coming from governments, the IMF said.

"A key issue is whether the global economy is just hitting another bout of turbulence in what was always expected to be a slow and bumpy recovery or whether the current slowdown has a more lasting component," the lender added.

From the generally grim picture, commodity futures could somehow insert some rebound modes in the last quarter of 2012, which basically should underpin the expansion of the Australian economy, owing to its resource-centric economic activities, the IMF said.

Yet even the climb of the local economy must be reduced, with the IMF allowing for a downward revision by 2013, from the 3.3 per cent this year to 3.0 per cent expansion next year.

There is no provision for contraction at least, analysts said, though they added that with snags emerging in many sectors the promised surplus of the federal government would become harder to come by on 2013.

That domino chip, once felled, would only trigger the further slowing down of the Australian economy starting next year as policy makers struggle to curb expenses while pump up financial fluidity at the same time, which normally comes in the form of more or higher taxes.

What we could have are dynamics that could hamper quite a number of economic activities and growth in the process, economist Matt Sherwood told ABC today.

In light of the realistic economic environment presented by the IMF report, "it might be a good idea for the government just to abandon (the) idea of a fiscal surplus for financial year 2013 and just achieve ... a modest deficit," Mr Sherwood said.

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